RBS: shake-up is long overdue Frugality and simplicity ought to be the hallmarks of any Scottish institution, especially Royal Bank of Scotland. Stephen Hester, chief executive, has tried to display both in his three-year tenure. Yet he has not rolled up his sleeves and dealt conclusively with RBS's misfiring global banking and markets unit. A board meeting at the end of the month should take decisive action. About time. The division has sustained RBS through its post-crisis restructuring. But the downturn and a global regulatory onslaught have exposed the weaknesses of the unit's lopsided, debt capital markets-dominated structure. Its operating profit in the third quarter fell by 80 per cent to £112m, year-on-year. Its chances of becoming a top division full-service investment bank are zero. But it still has a chance of cutting it as a niche contender, just as BNP Paribas, Société Générale and UBS have learnt to do. Debt capital markets is its strongest suit. It is right to exit units that are doomed to remain sub-scale. The trouble is, conditions for exits are appalling. Too many banks are selling assets to meet regulatory targets. And it is a buyer's market. Valuation of the business is tricky as RBS does not break down the unit's profits. It could be worth £5bn. An outright sale would be dangerously disruptive to RBS's corporate business, however. For example, RBS Greenwich Capital, its US mortgage-backed securities unit, although a heavy capital consumer, derives much of its revenue from RBS clients. Better to sell Hoare Govett, the sub-scale equities bit in the UK. It may not be worth much, but RBS would save on highly paid brokers and the associated reputational risks. RBS trades at 0.4 times book value, so Mr Hester must not delay. There is nothing like demoralised staff and cherry-picking rivals to destroy value in an investment bank.