14-Jan-2012 - Banks Overhaul for New, Leaner Era

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BY DANA CIMILLUCA, DAVID ENRICH AND SARA SCHAEFER MUÑOZ LONDON—The investment-banking industry, notoriously prone to cyclical hiring and NBA jerseys firing during booms and busts, is in the midst of a retrenchment that may be more far-reaching. Thursday's announcement that Royal Bank of Scotland Group PLC will eliminate thousands of jobs and exit a handful of business lines in its investment bank highlights the significant NFL shop jerseys reversal under way at some banks in Europe that, until recently, aspired to compete on the same level as traditional heavyweights like Goldman Sachs Group Inc. Banks from RBS to UBS AG and Italy's UniCredit SpA have in recent weeks announced football jerseys cutbacks that go beyond the ...

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14-Jan-2012 - Banks Overhaul for New, Leaner Era

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BY DANA CIMILLUCA, DAVID ENRICH AND SARA SCHAEFER NBA jerseys MUÑOZ LONDON—The investment-banking industry, notoriously prone to cyclical hiring and firing during booms and busts, is in the midst of a retrenchment that may be more far-reaching. Thursday's announcement that Royal Bank of Scotland Group PLC will eliminate thousands of jobs and exit a handful of business lines in its investment bank highlights the significant custom nhl jerseys reversal under way at some banks in Europe that, until recently, aspired to compete on the same level as traditional heavyweights like Goldman Sachs Group Inc. Banks from RBS to UBS AG and Italy's UniCredit SpA have in recent weeks announced cutbacks that go cheap nba jerseys beyond the ...

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14-Jan-2012 - Banks Overhaul for New, Leaner Era

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BY DANA CIMILLUCA, DAVID ENRICH AND SARA SCHAEFER MUÑOZ LONDON—The investment-banking industry, notoriously prone to cyclical NFL jerseys cheap hiring and firing during booms and busts, is in the midst of a retrenchment that may be more far-reaching. Thursday's announcement that Royal Bank of Scotland Group PLC will eliminate thousands of jobs and exit a handful MLB jerseys of business lines in its investment bank highlights the significant reversal under way at some banks in Europe that, until recently, aspired to compete on the same level as traditional heavyweights like Goldman Sachs Group Inc. Banks from RBS to UBS AG and Italy's UniCredit SpA have in recent weeks announced cutbacks that go beyond the ...

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14-Jan-2012 - Banks Overhaul for New, Leaner Era

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By DANA CIMILLUCA, DAVID ENRICH and SARA SCHAEFER MUÑOZ LONDON—The investment-banking industry, notoriously prone to cyclical hiring and firing during booms and busts, is in the midst of a retrenchment that may be more far-reaching. Thursday's announcement that Royal Bank of Scotland Group PLC will eliminate thousands of jobs and exit a handful of business lines in its investment bank highlights the significant reversal under way at some banks in Europe that, until NFL jerseys cheap recently, aspired to compete on the same level as traditional heavyweights like Goldman Sachs Group Inc. Banks from RBS to UBS AG and Italy's UniCredit SpA have in recent weeks announced cutbacks that go beyond the usual bear-market retrenchments. Even stronger industry players, like Credit Suisse Group AG, are making moves that show how much pressure the industry is under to adapt to new realities. In addition to the elimination of 3,500 jobs, RBS said it would shut four divisions at the heart of the investment-banking business, including stock underwriting and mergers-and-acquisitions advisory. Unlike other banks that are trimming portions of their investment banks, RBS came under direct political pressure to do so, with U.K. Chancellor of the Exchequer George Obsorne saying publicly last month that it should shrink that division to reduce risk. The U.K. bank, which before the financial crisis had lofty ambitions under former Chief Executive Fred Goodwin, now plans to focus on businesses that are closer to its core lending franchise, such as bond underwriting and foreign-exchange trading. RBS, which still is 83%-owned by the U.K. government after a bailout three years ago, said it is pulling back due to tough market conditions and increased regulations that make it harder to earn a profit in such businesses. RBS executives said that doing business in areas such as mergers and acquisitions without being a top player has become untenable. RBS's investment bank faces particular strain from new U.K. rules that would force banks to isolate their wholesale businesses from their retail operations, which banks often use to fund their riskier activities. RBS also plans to sell some of its Asian cash-equities banking businesses on a market-by-market basis, a person familiar with the matter said. RBS already has received interest from Chinese and Japanese buyers for some of those units, the person said. The cutbacks aren't expected to have a big impact on the investment bank's U.S. operations, which are based in Stamford, Conn. Formerly known as RBS Greenwich Capital, the business has 2,300 employees and concentrates mostly on fixed-income markets. A person familiar with the bank's plans said some job cuts may take place, but overall, employment will likely stay "fairly stable." RBS also owns Citizens custom nhl jerseys Bank in the U.S., a regional lender with more than 1,500 branches in 12 states. The investment-banking industry tends to swell up when times are good—as they were in the period before 2008—and shrink in the aftermath of financial crises, or any other periods, like today, when profits dry up. As a result, at least some of the current retreat is likely to prove temporary when the financial and economic clouds part in Europe and businesses such as M&A and equity underwriting come back to life. But observers said portions of the pullback under way now won't likely be reversed, at least not any time soon. Although the most significant moves are taking place in Europe, the region plays a big role in the industry globally, so the shake-up likely will affect the competitive landscape in the U.S. and elsewhere. "There is something of a permanent shift here," said Douglas Elliott, a longtime investment banker who is now a fellow at the Brookings Institution think tank. "This is a bit like what happened after the Great Depression. It will be harder to make a lot of money and therefore it gives an impetus for firms to reconsider and pull back." It isn't just the lackluster business environment that is prompting banks to rein in their lofty investment-banking ambitions. A realization is sinking in among securities-industry executives that because of the huge potential losses they are exposed to in bear markets, the business just isn't as attractive as it once seemed. In addition, a small number of deep-pocketed banks have emerged from the crisis in relatively strong positions, making it harder for smaller players to compete. The biggest shift, however, is that new regulations are simply making investment banking less lucrative. The Basel accord, signed last year by most countries with international banks, requires lenders to set aside greater reserves to cover potential losses on certain investment-banking activities. Countries like Switzerland and the U.K., whose banking industries required big taxpayer bailouts, have gone even further with restrictions on their banks. The combination of tougher regulations and the consolidation of investment-banking power among a handful of big firms "is going to require a permanent change in the industry," a shakeout that is already under way among midtier European investment banks, said Robert Law, a banking analyst in London with Nomura Securities. "I think it is a permanent reassessment of the areas they want to be in and the profitability they can make in certain business lines." The RBS moves mirror a similar scaling back of UBS's investment-banking ambitions. The Swiss bank, which had once aspired to be among the top securities houses globally, in recent years has been buffeted by huge credit losses and a rogue-trading scandal. In November, it announced a new strategy that effectively puts an end to such ambition. In addition to another round of job cuts of its own, UBS said then that it was exiting four businesses, including proprietary stock trading. Other banks that had ambitions stretching far beyond their home markets, but forced of late to scale back, include Nomura Holdings Inc., Société Générale SA and UniCredit, which in November said it would get out of an equities business in Western Europe as well as eliminate thousands of jobs. Even stronger players are taking steps to retool themselves in Europe. Credit Suisse announced last month that it would eliminate a raft of stand-alone industry-coverage groups in its investment bank and combine them into three "supergroups." As part of the move, announced in an internal memo, the bank also will disperse M&A bankers to other groups. People inside the bank said that, rather than a retreat from Europe, the moves represent an effort to manage the business more efficiently and effectively. —Fiona Law and Robin Sidel contributed to this article. Write to Dana Cimilluca cheap NFL jerseys at dana.cimilluca@wsj.com and David Enrich at david.enrich@wsj.com

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