Several redundancies have been made by Royal Bank of Scotland (RBS) in its equity derivatives and fixed-income, currency and commodities (FICC) divisions across Asia during the past few days. Internal memos have revealed the extent of the cut-backs, which are aligned to the UK bank’s new strategic focus that was announced at the beginning of this year.
RBS said in a statement on January 12 that its priority was to focus on its core strengths. In particular, it decided to exit its cash equities and corporate finance businesses worldwide, which has led to cut-backs in related operations.
The move was made “in light of the changing regulatory environment and deterioration in market conditions”, Pierre Ferland, head of markets for Asia-Pacific, told FinanceAsia on Friday.
“As a part of this [January] announcement we have made changes in our management structure, to align our business structure to our areas of strength. We believe the changes will make it easier for clients to connect and trade with RBS across all of our markets products in all asset classes,” he added.
Most notably, the bank’s investor products and equity derivatives sales teams have been consolidated into one salesforce covering all products and segments. The restructuring is effective immediately.
The equity derivatives business is closely linked to cash equities, so the bank deemed it necessary to make redundancies to optimise use of capital and resources and erase duplication of functions and over-capacity. Headcount reductions have also been made in the fixed-income derivatives division, where the business had been connected to the bank’s corporate finance activities.
According to sources, the cull includes Kevin Chang, head of Asian equity derivative strategy, and Monique Sin, head of equity derivative private banking sales; but the status of Abhinav Gorawara, head of equities & structured retail sales for Asia, is unclear. Gorawara and Sin, along with Ben Wilder (who remains at RBS) joined from Merrill Lynch less than 18 months ago.
Other confirmed redundancies are Kevin Chin (ePlatforms), Gilbert Heng (structuring), Ren Hwang (Taiwan sales), Victor Chan (Hong Kong warrant sales) and Eugene Kang (Korea sales).
Within the FICC department, Pryesh Shah (structuring) and Katherine Zhou (hybrids trader) have both left, while Jitendra Kamdar, previously head of Southeast Asia derivatives sales, has been reassigned to a relationship management role.
“This [strategic focus] has inevitably led to an impact on people across Asia-Pacific to align our resources with our business needs to ensure we have an efficient and sustainable business model. Having to cut jobs is the most difficult part of our work to reshape RBS and these decisions are not taken lightly. As we always do, these decisions are discussed with our people first, and we do not comment on individual situations” said Yuk Min Hui, an RBS spokesperson.
However, RBS is emphatic that it retains its equity derivatives business with no decline in product capabilities and service. Its trading, sales and structuring front-office still numbers between 70 and 80 staff.
“RBS remains committed to our investor products (structured retail) and equity derivatives businesses, which are very highly valued by our clients globally. The strengths of our multi-asset investor products and equity derivatives business have been recognised by our clients consistently through industry surveys,” said Ferland.
The new set-up combines the corporate and institutional distribution teams within Markets Asia-Pacific into one multi-asset salesforce that includes: investor products and equity derivatives (IPED) sales, fixed-income relationship management, e-commerce, futures execution services and mandate sales.
The IPED sales operation has three teams, largely determined by client categories.
Olivier Destandau, head of investor products sales for APAC ex-Japan, leads the coverage of private banks, ultra-high-net-worth individuals and retail aggregators (banks and insurance companies), and includes the distribution of FICC instruments and equity derivatives.
A team led by Jerry Yoon, head of flow institutional equity derivatives sales for APAC ex-Japan, covers hedge funds, asset managers and sovereign wealth funds and focuses on delivering tailored solutions to meet client needs. Products include equity derivatives, market access, delta one and convertible bonds, but not fixed income.
Finally, Akira Takahashi is head of investor products and equity derivatives sales for Japan. His team is merged with Third Party Sales to service securities companies across both fixed-income and equities products.
Destandau and Yoon report to Samir Atassi, head of sales for APAC ex-Japan, as do the FICC ex-Japan sales teams. Takahashi reports to Toby Taniguchi, head of sales for Japan.
Meanwhile, the IPED trading and structuring departments have also been redesigned.
IPED trading, APAC, now consists of structured products, Delta one, equity-linked and equity access & collateral trading businesses. The objective is to concentrate on product innovation and risk management. Kin Cheung is named head of the division, reporting to Ferland regionally and globally to Christian Erb, global head of investors and equity derivatives.
IPED structuring, APAC, will continue to focus on structuring for equities and custom indices globally and to drive the agenda for investor products and equity derivatives in conjunction with the APAC salesforce. This team is headed by Hong Kong-based Shane Edwards, who reports to Ferland regionally, and globally to Erb and Beat von Gunten, global head of sales for equities & structured retail.
“We strongly believe this new structure will allow us to deliver the best value to our clients, increase cross-sell and also deliver sales coverage in the most cost-efficient way,” said Ferland.
Although strategy is determined at the centre (that is, in the United Kingdom), regional offices have discretion on how to achieve those goals. In Asia-Pacific, the bank’s strength is its in-country operations — across 11 countries — as opposed to a hub-generated business. The main objective is to improve return-on-equity by increasing revenues, reducing costs and optimising the use of capital.
Few significant changes to RBS’s markets business are expected during the next 18 months.