Job cuts and a new 'bad bank' unit are planned for the downsizing firm, reports have indicated.
Part-nationalised bank RBS is to cut staff numbers by 20,000 and create a new "bad bank" unit in which to store toxic assets, as part of its restructuring programme.
Reports over the weekend suggest that a radical shrinking of the balance sheet is set to take place at the bank, which has been one of the firms hardest hit by the global credit crunch. An aggressively expansionary business strategy left RBS finances disastrously overstretched at the onset of the crisis, leading the bank to require £20 billion of government bailout money last year.
This capital infusion, which came as part of the Treasury's first bank rescue plan in October, has resulted in the taxpayer now having a stake in RBS of almost 70 percent. This part-nationalisation has provided the impetus for the streamlining of the bank's balance sheet.
RBS will now announce the creation of a £300 billion "non-core" unit for the difficult-to-value assets on Thursday, sources told the Sunday Telegraph. The update will come at the same time as the bank puts an official figure to their 2008 losses, estimated to be at a UK record of £28 billion.
Another prong of the downsizing strategy, the swingeing cuts in staff numbers, was reported in the Financial Times on Saturday.
