Royal Bank of Scotland has became the latest bank to admit it has suffered from the credit crunch fall out after it said it is cutting back its collateralised debt obligations (CDO) team to respond to a drop in market appetite.
The bank confirmed that Rick Caplan, MD of CDOs at RBS Greenwich Capital - a subsidiary that specialises in products including mortgage-backed and asset-backed securities, CDOs and interest-rate derivatives - has left along with six other executives.
RBS profitably marketed CDOs - packages of sub-prime mortgages and other asset-backed securities - both originating deals and then selling them on.
The sudden loss of appetite for these products and resultant collapse in business has forced RBS to reduce the department from 24 people to 17.
'The reduction of volumes dates back to the first quarter of 2007, and in the short term we do not see the level of demand returning to 2005-2006 levels', the bank said.
British hedge fund Cheyne Capital Management said yesterday that structured investment vehicles (SIVs) it manages may have to liquidate assets due to losses on their portfolios, raising fresh concerns over the potential for forced sales of securities into an already jittery credit market.
