Given the more fertile business environment, many Asian and European banks are adding headcount in the U.S. while thinning the herd at home. Just look at Deutsche Bank and Nomura. Royal Bank of Scotland, on the other hand, has decided to take its ball and go home.
RBS will cut as many as 400 U.S. jobs over the next 18 months as it scales back its once-impressive trading business, according to multiple media reports. Employees based in Stanford, Connecticut, the home to its biggest trading floor, will likely take the brunt of the punishment.
The moves come at interesting time for the state-owned bank, which is languishing through a lengthy reprivatizing effort. RBS is coming off a decent first quarter, with its trading performance being one of the highlights (at least when compared to other banks). However, RBS also saw its attempt to increase its bonus cap blocked before the plan even made it to shareholders.
Frankly though, neither bit of news has much of anything to do with the impending cuts. RBS is responding to new U.S. regulations that affect foreign banks with over $50 billion in assets. Rather than increase their capital requirements and agree to other stringent oversights, RBS is simply slipping below the $50 billion threshold. It will cut roughly $10 billion in risk-weighted assets by the beginning of next year, according to the Wall Street Journal.
Units that will be most affected by the cuts include the bank’s mortgage trading and its distressed loan trading businesses. RBS will also “optimize” its interest rates trading business, according to the Financial Times, which surely means job losses.
This will likely be a tough pill to swallow for some RBS bankers here in the states. It’s one thing to lose your job due to your performance or that of the bank. It’s another when your employer is simply trying to limbo under a relatively arbitrary asset figure.
Job Market Pulse (eFinancialCareers)
In the latest hiring roundup, Nomura and Deutsche Bank are adding debt traders, RBC eyes European expansion and UBS goes on a New York hiring spree.
The Ten CFA Commandments (eFinancialCareers)
We’ve asked a selection of professionals, students, coaches and people from the CFA Institute for some tips on passing the exam. Here are the top 10.
Bringing Back on Old Friend (MarketWatch)
Looking to regain its old magic, Pimco has rehired former senior executive Paul McCulley, who left the firm in 2010 to pursue philanthropic endeavors. McCulley is taking on the newly created role of chief economist.
Citi’s Plummeting Trading Revenue (WSJ)
Following in the steps of J.P. Morgan, Citi on Tuesday warned of a second quarter trading slump. This will be a rough one. Revenues could fall as much as 25%.
DB Going All-In on Fixed Income (Bloomberg)
With most competitors retrenching, Deutsche Bank plans to further invest in fixed income. The German bank will likely hire in Europe and the U.S., where “we see growth as being strong,” co-Chief Executive Officer Anshu Jain said on Tuesday.
Americans Charged in Libor Case (FT)
Three former Barclays’ traders – Jay Merchant, Alex Pabon and Ryan Reich – were officially charged on Tuesday with colluding to manipulate Libor rates.
They are the first U.S. bankers to be charged during the ongoing investigation
New Cash Equities Head (Financial News)
UBS has named Gary Head its new global chief of cash equities. Head is replacing Phil Allison, who left in March.
Buzz Around the Office
Questions in French, Please (Yahoo)
Little sports journalism tip: know who won the match before asking the first question.
Quote of the Day: “Two jackasses got married in Italy Saturday. Sex-tape star Kim Kardashian, 33, wed egotist Kanye West, 36, in a wedding opulent enough for Florence’s Medici dynasty and tacky enough for reality TV.” – the New York Post’s actual write-up on the Kimye wedding