RBS planning to scrap ABN Amro's joint venture with Rothschild

Click to follow
The Independent Online

Royal Bank of Scotland is planning to scrap ABN Amro's joint venture with Rothschild, the blue-blooded investment bank, as part of its takeover of the Dutch lender's business.

The link-up in equity capital markets will finish at the end of this year. It is understood there will be no job cuts and that ABN's 100 staff will be reabsorbed while the remaining 50 bankers will return to Rothschild.

The business was formed in 1996 to arrange and underwrite equity transactions in Europe, Asia and Australia. The banks said they had taken the decision to end the venture following the RBS consortium's acquisition of ABN in October and in light of changes in the global investment banking business.

The decision follows RBS's announcement last month that it was keeping Hoare Govett, ABN's corporate broking business, as part of its move into equities. Unlike Hoare Govett, the joint venture, which focused mainly on Europe, had not reported directly to Frank McKirgan, ABN's head of equities. RBS is said to want a single international equities business to add to its global markets division.

Johnny Cameron, RBS's chief executive of corporate markets, said: "This is consistent with our prior decision to retain Hoare Govett. As a result of these decisions, we will create a single, integrated, wholly-owned equities platform which will give us further opportunities to add value for customers worldwide."

The move into equities marks a shift in RBS's strategy. Sir Fred Goodwin, the chief executive, had insisted before that RBS's corporate bank was not an investment bank and that investment banks were run for the benefit of employees rather than shareholders.

RBS said last week that it expected bigger financial returns from buying ABN Amro than it had forecast when it announced its offer for the Dutch bank.

RBS and its consortium partners, Santander of Spain and Belgium's Fortis, still have to decide what to do with other ABN assets that do not fit into any of the banks' immediate plans. These include ABN's stake in Saudi Hollandi Bank in Saudi Arabia and ABN's Pakistan banking business.

David de Rothschild, chairman of Rothschild, said: "We are proud of our successful 11 years of collaboration with ABN Amro and we have learns much from the many transactions, both large and small, which we have completed together. This is a logical time for the two banks to pursue their separate paths."