The Royal Bank of Scotland will apparently eliminate about 7,000 jobs, following the acquisition of ABN Amro and due to credit market losses, Bloomberg News reported Monday, citing people familiar with the situation.
RBS (NYSE: RBS), the United Kingdom's second-largest bank, said the move is consistent with earlier stated intentions to cut costs as it merged its two wholesale banking businesses and also is warranted "in light of current conditions in some parts of the global credit markets."
Shares of RBS gained 12 cents to $7.19 on the news in midday Monday trading.
Thinning the ranks
Independent stock analyst C. Leonard Bauer told BloggingStocks Monday investors / traders should not be overly alarmed by RBS's likely upcoming staff adjustment. "I interpret this as more deal-related than credit markets-related," Bauer said. "RBS added considerable positions during the strong years for investment banking, and the bank wasn't understaffed at the start of the boom in 2003, so some job cuts were expected on those grounds. The ABN Amro deal simply meant that there would be more wholesale banking positions to consolidate." Bauer added that he does not have a rating on, nor own, RBS's shares.
Further, Bauer said the likely RBS cuts does not change his outlook on the credit market / bond market recovery.The worst of the mortgage and related asset-backed write-offs are over, he argued, and he expects the size and frequency of investment bank write-off announcements to taper in Q3 and Q4 2008.
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