Reports: RBS Plans To Exit U.S. Mortgage Business

(RTTNews) - British lender Royal Bank of Scotland Group plc's (RBS, RBS.L) securities unit now plans to fully exit its U.S. mortgage trading business, compared to its earlier plan to partly exit the mortgage-trading and distressed-loan trading business, according to media reports on Thursday.

RBS will now reportedly exit mortgage backed-security, commercial real estate, and commercial mortgage-bond sales and trading in the U.S. However, the company will retain its non-mortgage asset backed securities team.

In May, media reports indicated that RBS would cut up to 400 jobs in its U.S. trading business over the next two years as part of the British lender's efforts to reduce its assets ahead of tough new U.S. regulations.

The job cuts came ahead of new rules planned by the U.S. Federal Reserve that will force foreign banks to bolster their capital cushions and subject themselves to tough stress tests as well as rigorous oversight.

The new rules will apply to foreign banks with at least $50 billion in assets in their U.S. units, which are required to set up separately-capitalized holding companies. RBS reportedly intends to shrink below the $50 billion threshold so as to escape the rigorous oversight, instead of adapting to the new regime.

At that time, RBS was said to be planning to cut its U.S. mortgage-trading business by two-thirds, while retaining its securitisation and agency mortgage business. The company's U.S. business employs about 2,400 people.

RBS closed Thursday's trading at $11.75, down $0.07 or 0.59 percent on a volume of 231,707 shares.