The Royal Bank of Scotland has confirmed that it is winding down its Rates prime brokerage and Rates OTC clearing businesses. The bank cites the “increasing level of capital, operating costs and investment that would be required for the business to be globally competitive in a market with extremely thin margins” as the reason for withdrawing from these businesses.
According to RBS, the retreat will not affect its FX business. A spokesperson from RBS says: “We remain fully committed to our business in FX prime brokerage, as this is a key component of the FX product suite that many of our clients require. Likewise, we remain fully committed to exchange-traded futures and options, as our execution and clearing products play a vital role in the hedging needs of our core corporate and financial institution client franchise.”
To fully wind down the Rates PB and Rates OTC clearing businesses is estimated to take three to eight months. Only a small number of front office employees in the global business will be impacted by this decision, according to the spokesperson, but the bank will be working to secure redeployment options for them “where possible”.
In addition, support functions will be impacted over time, particularly IT and operations. “But as we are committed to servicing our existing clients and as this will be an orderly exit, there is likely to be limited impact in the short term,” says the spokesperson.