Bloomberg
Tokyo
Royal Bank of Scotland Group will pull out of fixed-income trading in Japan and slash staff numbers by more than 200 to about 30, with most of the jobs going by February, according to a person familiar with the plan.
RBS Securities Japan would surrender its primary dealership in the country’s government bond market and retain only enough people to service clients, said two people familiar with the proposal, who didn’t want to be named because the details aren’t public.
The Edinburgh-based bank is seeking to pare assets and improve profitability after six consecutive annual losses. RBS is accepting offers for its international private bank, Coutts International, as soon as this week, according to a person with knowledge of the matter.
“RBS is under special circumstances as it is pursuing a reorganisation of its business throughout the world,” said Toshihiko Naito, an analyst at Japan Credit Rating Agency Ltd “The profit opportunity for the primary dealers seems to be decreasing” given the central bank’s monetary-easing policies, he said.
The Bank of Japan in October expanded its unprecedented programme of annual bond purchases to bolster economic growth. RBS is one of 23 primary dealers in Japan’s government bond market, according to Ministry of Finance data. The UK bank was the 10th-biggest buyer of short-term bonds in the six months ended September 30, the data show.
In Japan, the lender is under a performance improvement order for attempting to manipulate benchmark interest rates. The incident prompted Ryusuke Otani, RBS Securities Japan’s country representative at the time, to resign in April 2013.
RBS executives will meet with Financial Services Agency officials as early as today to disclose the plans and will notify clients as early as next week, pending approval, the people said. Atsuko Yoshitsugu, a Tokyo-based spokeswoman for RBS, declined to comment, as did Toru Oe, an FSA spokesman.
The retreat comes as some foreign banks struggle to make money in Japan. Citigroup is selling its consumer-banking business to Sumitomo Mitsui Financial Group, people with knowledge of the matter said this week. UBS Group had a loss of ¥4.2bn ($35mn) in Japan for the year ended March, compared with a ¥56bn loss the previous year, filings show.
RBS’s loss in the 12 months to March widened by 78% to ¥5.7bn, the filings show.
Britain’s largest taxpayer-owned lender is curtailing operations in Asia, where it currently employs about 3,000 people not including those in India, one person said. Chief Executive Officer Ross McEwan, 57, is eliminating thousands of jobs and cutting about £1bn ($1.6bn) in costs.