RBS sees investment bank unit revenues down 65 pct under revamp

(Adds comments from CIB CEO, details)

By Steve Slater

LONDON, Nov 12 (Reuters) - Britain's state-backed Royal Bank of Scotland expects annual revenues in its corporate and institutional banking (CIB) business to fall to about 1.4 billion pounds ($2.1 billion) after it is restructured, down 65 percent from last year.

Costs in 'Future CIB', which includes investment banking, are expected to drop to 700-800 million pounds, down more than 75 percent from 3.6 billion pounds last year, RBS (LSE: RBS.L - news) said in a presentation on Thursday giving details of the restructuring.

RBS said in February it would shrink its investment bank business by slashing its assets by 70 percent, cutting thousands of jobs and reducing the number of countries it operates in to 13 from 38.

"What we end up with is a much more focused, much more streamlined, much more efficient business than the one we had before," said Chris Marks, chief executive of CIB.

RBS has said CIB's returns in the past were too low, its costs and capital usage were too high, and many of its activities were too risky.

It (Other OTC: ITGL - news) is aiming to cut CIB's assets to 75-80 billion pounds by 2019, down from 241 billion at the end of last year and from 431 billion in 2009. On a risk-adjusted basis assets will drop to 35-40 billion pounds.

It marks the latest attempt by RBS to cut back its investment bank since the financial crisis, due to both political pressure and weaker profitability due to tougher regulations.

RBS bulked up its investment bank in the decade before the 2008/09, culminating in its purchase of ABN AMRO's investment bank. RBS subsequently needed rescuing by the UK government and the taxpayer still owns a 73 percent stake.

Marks said CIB would in future focus on three core businesses - financing, rates and currencies.

He said the business was pursuing a "barbell approach" - covering high value products such as financing at one end, and high volume, low cost automated products at the other end.

"We're not doing stuff in the middle that can be high cost and intensive and is rarely valued by customers," Marks said.

($1 = 0.6587 pounds) (Editing by Anjuli Davies and Mark Potter)