Royal Bank of Scotland shares plunge as boss quits

Shares in Britain's state-rescued Royal Bank of Scotland slumped on Thursday, one day after chief executive Stephen Hester quit, and as the company axed another 2,000 jobs at its investment banking division. RBS shares dived by as much as 8.2 percent in early trade, as investors fretted over news of Hester's departure. However, the stock clawed back some ground to finish at 315 pence, down 3.3 percent on London's benchmark FTSE 100 index, which ended 0.08 percent higher. In a shock announcement, Hester said late Wednesday that he would step down later this year to allow someone else to help RBS return to the private sector. And in a fresh twist on Thursday, the Edinburgh-based bank will axe up to 2,000 posts or about 20 percent of its markets division by the end of 2014, according to a person familiar with the matter. The latest round of job cuts adds to the almost 40,000 jobs that RBS has axed in a drastic restructuring over the past five years. The lender also announced Thursday that it would take steps to reduce the balance sheet of the markets division to under £80 billion ($126 billion, 94 billion euros) by the end of 2014, in line with previous guidance. "Today we are announcing the changes we will make to meet that target so that with increased capital efficiency we can provide clients with the products they need while enabling the markets division of RBS to be profitable and sustainable," the bank said. It added: "Our business will be simpler and more efficient, reducing the complex procedures that generate operational and conduct risk." As part of a new strategy, RBS will exit all structured retail investor products and equity derivatives. RBS was ravaged by its badly-timed consortium takeover of Dutch bank ABN Amro at the top of the market in 2007, just before the financial crisis struck, and was kept afloat with £45.5 billion ($71.3 billion, 53.5 billion euros) of British taxpayer cash. Hester said on Wednesday that the task of putting RBS on an even footing while meeting the demands of the government -- which still owns 81 percent of the bank -- had been at times bruising. "The market can only hope that a replacement has already been identified in order to minimise the uncertainty which has now been added to the company's turnaround plans," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers. In a memo to the group's 100,000 employees on Thursday, Hester stressed how dire the situation was at the height of the 2008 global financial crisis when he was appointed. "RBS lost sight of why it was founded, and it nearly died as a result. We've got back to a place where we can once again focus on the customer above all else," he told staff.