Royal Bank of Scotland has become the latest overseas bank to shrink its business in the United States after announcing it would cut its mortgage trading business by two-thirds, the Financial Times reported on Tuesday.
The British bank will eliminate hundreds of jobs in the United States over the course of two years as part of an effort to reduce its assets ahead of new rules set out by the U.S. Federal Reserve, the FT reported citing people familiar with an internal announcement made by RBS on Tuesday.
An RBS spokesperson told Reuters in an emailed response that "as the financial services industry continues to evolve so must RBS's U.S. Corporate & Institutional Banking business. Our ultimate goals are to enhance our client focus and connectivity, simplify our operating model, mitigate risk and reduce cost."
The RBS cuts primarily affect the non-agency mortgage business, and the British bank is expected to retain its securitisation and agency mortgage business, the FT said. (http://link.reuters.com/guk69v)
The U.S. Federal Reserve in February adopted tight new rules for foreign banks to shield the U.S. taxpayer from costly bailouts, ceding only minor concessions despite pressure from abroad to weaken the rule.
The largest foreign banks, with $50 billion or more in U.S. assets, need to set up an intermediate holding company subject to the same capital, risk management and liquidity standards as U.S. banks, the Fed had said in February.