As time goes on, it certainly looks like it.
As well as begging for an additional 12bn from shareholders, RBS is now being forced to chop 7,000 jobs, or 25% of the combined workforce, as it struggles to integrate its global markets division with ABN’s investment bank.
When the merger was mooted, RBS put an estimated €2bn of cost savings from the combined investment banking divisions at the heart of its strategy. But with investment banking business now down the pan, the necessary cost savings and job cuts look set to go a lot deeper.
To make matters worse, RBS paid top dollar for ABN at the top of the market. The Dutch bank then wrote down €1.6bn ($2.4bn) on its global markets business in the fourth quarter of 2007, and has accounted for a third of RBS’s credit market writedowns so far, according to Creditsights – making it a ‘very expensive purchase’.
Other banks have made expensive mistakes in the past – take Credit Suisse’s ingestion of DLJ in 2000. But RBS’s acquisition of ABN looks like the worst yet.
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