RBS investor products group faces cuts in merger with non-linear trading

Royal Bank of Scotland (RBS) is embarking on further cuts to its investor product and equity derivatives (IPED) unit, following the creation of employee consultation bodies for the UK and Europe, the Middle East and Africa last week.

RBS expressed its commitment to the IPED team in an internal memo from Peter Nielsen, chief executive of markets, on September 28, but the unit will be integrated with the non-linear trading group, which includes all structuring staff outside of equity derivatives, according to a London-based banker away from the UK bank.

The memo names Martin van Pieterson as global head of the combined non-linear trading and investor products group, reporting to Michael Lyublinsky and Peter Rading, co-heads of global trading. Van Pieterson will work on the integration with Christian Erb, global head of IPED, who also reports to Lyublinsky and Rading. “During the transition” Erb will retain responsibility for day-to-day trading and risk management activities for the IPED desks, according to the memo. Bryan Reid will remain global head of sales, research and strategy.

Opinion is divided about whether the move is simply a pure integration of the two divisions or represents a takeover by the fixed-income side. The latter has not been that unusual a development in structured products for the past three years.

The move is also aimed at reducing costs and includes “significant” cuts in the bank’s global franchise. Any job losses will be subject to consultations with the regional employee bodies.

The memo states that the benefits of the integration will include better relations between the two groups in the retail distribution of structured products, hybrids and dynamic strategies. It also follows the recent trend of creating cross-asset platforms.

At a presentation on September 24, RBS revised upwards the 3,500 headcount losses in its Markets and Investment Banking division that were announced in January to 3,800 over a two- to three-year period. The presentation highlighted the bank’s desire to “defend [its] top ranking in exchange-listed products in [the] UK, Germany, Switzerland, [the] Netherlands [and] Italy… [and] tighten links with retail fixed-income products”.

An RBS spokesperson declined to comment on the memo.

 

This article was first published on Risk

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