RBS set to trim investment bank

The Royal Bank of Scotland (RBS) is expected to confirm plans to reduce its investment banking division in a statement later on Thursday.

It is understood the bank is planning to merge or sell a number of divisions, affecting up to 4,000 staff, though many of these will be outside the UK.

RBS hopes that staff will be transferred rather than made redundant.

The bank is expected to sell its equities division and its corporate broker, Hoare Govett.

Other parts of the investment bank may be merged with its payments systems division.

Another area of the bank's operations likely to be affected are its operations in the Irish Republic, including employees at subsidiary Ulster Bank, which RBS bought in 2000.

The firm has also reportedly received interest from potential buyers for its Australian business.

RBS's investment banking division has traditionally been stronger in debt and money markets, says the BBC's Business Editor, Robert Peston.

The equities business, that now looks likely to be wound down, had been added only in recent years under the leadership of former chief executive Sir Fred Goodwin.

Our correspondent also points out that the move may not prevent future crises.

"To be clear, these decisions should not be seen as in any fundamental sense making RBS 'safer' or much less likely to pay big bonuses," he said.

Chancellor George Osborne announced the change in strategy at the bank in December 2011.

"Investment banking will continue to support RBS's corporate lending business but RBS will make further significant reductions in the investment bank, scaling back riskier activities that are heavy users of capital or funding," announced Mr Osborne to Parliament in December.

Mr Osborne's announcement came in the wake of a report into the bank by the Financial Services Authority in December 2011 which pointed to "errors of judgement and execution" by RBS management which led to its failure in 2008.

The bank is now 84% owned by the British government after taxpayers injected £45.5bn of new capital into RBS.