RBS has been busy purging itself of superfluous investment bankers. In the past three months, it’s got rid of 700 of them. In the past year, it’s got rid of 2,400. RBS Global Banking and Markets (GBM) is now leaner and meaner, but the purging isn’t over yet.
In today’s quarterly results release, RBS reminded everyone that it wants to get 3,400 people from its global banking and markets business by 2014. This is 100 fewer than it stated in January, but is still a lot more people than have been cut so far.
It remains to be seen who will be let go. RBS has finished cutting from its equities business, and plans to spin out its M&A business, which employs around 45 people. That leaves 2,655 people to be cut from elsewhere in GBM.
The remaining 2,655 cuts seem likely to impact lower paid staff in the middle and back office. We know this because RBS CFO Bruce Van Saun said today that the bank has already spent £225m of the £550m it expects to spend in total on GBM restructuring. The implication is that the 20% of people who’ve been let go so far received 50% of the total set aside for redundancy payments.
In other RBS-related news, GBM generated more than 50% of the operating profits at RBS in the first quarter, but its employees are earning progressively less and less. At £41k ($66k) per head in the first quarter, RBS’s investment bankers accrued nearly 50% less than the $113k average accrued by investment bankers at JPMorgan, Goldman Sachs, Credit Suisse and UBS.
Moreover, the compensation ratio at the investment bank fell to an insipid 29%. This may be transitory, however: long term, Stephen Hester said it’s more likely to be in the, “high 30s.”