The Royal Bank of Scotland (NYSE:RBS) has launched major cuts in its fixed income department that could slash that division’s workforce by 30% to 35%, sources have told FOX Business, making it the next big bank to cut jobs as economic sentiment continues to turn sour.
Shares of the U.K.-based banking giant were down about 2.5% to $7.25 just before the market closed on Monday. Its shares have fallen some 36% since the start of August.
The move by RBS comes as major banks around the world have initiated job cuts in an effort to save on costs and adapt to more stringent regulations.
Last week, Switzerland’s Credit Suisse (NYSE:CS) said it would cut another 1,500 jobs as it tries to restructure its profit-guzzling investment bank and rebound from a disappointing third quarter. Those cuts are on top of 2,000 it announced in July, amounting to about 7% of its global workforce in total, and are expected to amount to two billion francs in cost savings by 2013.
A week ago, British giant Barclays (NYSE:BCS) said it would axe jobs amid weaknesses in its investment bank and global financial turmoil.
In September, HSBC (NYSE:HBS) of London said it would likely cut 3,000 jobs at its Asian headquarters in Hong Kong over the next three years as part of a broader restructuring effort. In August, Switzerland’s other large bank, UBS (NYSE:UBS) said it would cut 3,500 jobs to save billions on costs.
The axe in RBS’s fixed income division comes days after the bank predicted its road to recovery would be “longer and bumpier” than it initially expected because of the euro zone debt crisis and tougher regulations on large financial institutions.
The 83% state-owned bank said on Friday that it would likely not meet return targets it had set for 2013. It has taken a series of bailouts since 2008 and continues to sell assets it doesn’t seem crucial to the future of the business.
RBS said on Friday that its third-quarter revenue declined in the non-core division, and that its global banking and markets investment bank pushed group revenue down 20% year-over-year.