RBS will close more of its profitable investment banking units as it is put under increasing pressure from the government, the state-backed bank announced yesterday.
The bank lost £5.16bn in 2012, but insisted it is successfully cleaning up its balance sheet and moving towards the goal of privatisation, and could potentially be ready to look at the options for a sale as soon as next year. And it may also sell a stake in US bank Citizens in the next two years.
“Our target is for 2013 to be the last big year of restructuring,” said chief executive Stephen Hester.
Chairman Philip Hampton said “it is a reasonable aspiration” to prepare for a sale in 2014, provided the economy is improving.
But that aim is being made more difficult by George Osborne who is taking a more active role in managing the bank’s progress.
The markets business made an operating profit of £1.546bn, up 68 per cent on the year, but despite officially being run as a commercial operation, the chancellor has ordered buts to the unit to show he is focusing RBS’ resources on the UK’s households and firms.
“UK Financial Investments has become more activist, and it is impossible not to pay attention to the majority shareholder,” said Hester. “There are market pressures and other investment banks are responding in a similar way, but as the chancellor has made clear there is also governmental pressure in our case.”
RBS has not yet fully planned its response to the new direction from the government, and will unveil which functions are affected at its half-year results. The bank’s shares plunged 6.6 per cent on the day.