RBS to exit U.S. mortgage business

Nov 14, 2014, 1:46 AM EST
n RBS logo sits on a stone wall outside the Royal Bank of Scotland Plc's (RBS) headquarters in Edinburgh, U.K., on Wednesday, Sept. 17, 2014. U.K. stocks advanced, as a measure of unemployment fell to a six-year low, while investors awaited the Federal Reserve's monetary-policy decision and tomorrow's vote on Scottish independence.
AFP/Getty Images

Royal Bank of Scotland Plc's securities unit will now exit its U.S. mortgage trading business after originally planning to shrink it by two-thirds. Reuters writes:

Exiting mortgage backed-security, commercial real estate and commercial mortgage-bond sales and trading "is a necessary part of repositioning our US business," an RBS spokesman said in an emailed statement.

RBS said in May it will eliminate hundreds of jobs in the United States over the course of two years to help reduce assets ahead of new rules by the U.S. Federal Reserve.

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 said in February.

The chief executive of the Royal Bank of Scotland (RBS) has told me that he "cringed" when he saw copies of the chat room messages which talk of "making free money" and "keeping numpties out of the market." The BBC reports:

Groups of bankers who went by the exotic names of The A Team, The 3 Musketeers and The Players colluded to fix foreign exchange rates for the advantage of their banks. And themselves.

The Financial Conduct Authority (FCA) helpfully published a selection of the messages - just so we could all see what was going on. Mr McEwan is one banking chief executive who has actually faced the media music today.

Of course, his bank is 80% owned by the taxpayer, so he has more responsibility than most. But the approach is certainly in contrast to the response of others. HSBC, for example, put out a one line statement this morning after the announcement of the record fines for foreign exchange manipulation. 

"HSBC does not tolerate improper conduct and will take whatever action is appropriate," it said.