The Royal Bank of Scotland, the largest government-owned bank in Britain, will announce later this week that it will exit the cash equities business. The division will either be sold or, if no buyers are found, shut down.
Bloomberg reported that a source who asked not to be identified said that the announcement would be made officially by CEO Stephen Hester and John Hourican, head of the global banking and markets division. The cash equities division, which includes the research division, has about 1,200 employees.
Hester has said that the investment bank is unsustainable at its current size. Since he took over the reins from Fred Goodwin in 2008, he has worked to decrease its size; in that time, its balance sheet has shrunk by almost 1 trillion pounds ($1.5 trillion). It has also slashed more than 30,000 jobs since it was the recipient of the biggest bank bailout in the world.
Last week another source said that RBS has hired Lazard Ltd. to advise it on the sale of parts of the equities unit, including stockbroker Hoare Govett.
A Jan. 7 report in The Times of London said the bank would shutter the division.