British banking major Royal Bank of Scotland (RBS) is reportedly downsizing its US mortgage trading business by two third, which might result in hundreds of job losses.
Sources familiar with the development were quoted by the Financial Times as saying that the UK bank will eliminate approximately 300 positions in the US over the next two years as part of its plan to slash its assets ahead of new rules set out by the US Federal Reserve.
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It is believed that the proposed cut in US Corporate & Institutional Banking business will mainly affect the non-agency mortgage business, while securitization and agency mortgage business will be retained, according to the FT.
In order to protect the US taxpayer from costly bailouts, the Federal Reserve in February 2014 adopted new stricter rules for foreign banks, which require higher capital and liquidity levels with more than $50bn in assets.
RBS with $85bn of assets in its broker-dealer business has opted to trim down the operation below the threshold to escape the Fed’s clutches instead of adapting to the new regime.
A statement by the bank’s spokesperson was cited by the publication as saying, "As the financial services industry continues to evolve so must RBS’s US corporate & institutional banking business."
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