Merger revamp claims ABN Amro chief

Mr James, the driving force behind his group's aggressive push into the local market in recent years, lost out in the battle to head the revamped regional division. RBS decided to hold on to ABN Amro after its proposed sale to the Commonwealth Bank fell through last month.

His will be the first of many job losses within the combined business as staff in the back-office departments such as IT, finance and other support services are shed to cut costs. RBS was unable to say how many would go.

Mr James will leave the company next week as a result of the initial integration of the two operations, which will be led by the former managing director of RBS Australia, Stephen Williams.

The terms of Mr James's departure have not been revealed, although it is believed RBS has agreed to purchase his shareholding in ABN Amro.

RBS has held off from buying the equity owned by the remaining ABN Amro staff for four months while its investment banking and financial market teams seek to make the most of the last quarter of the company's current financial year, which ends on December 31.

This will allow RBS to put a final purchase figure on the outstanding 20 to 25 per cent of ABN Amro's Australian division the Scottish bank did not acquire after last year's successful $100 billion consortium takeover of its global banking parent, based in the Netherlands.

Mr James has given no indication of what he intends to do next. He had spent the past few months preparing for new ownership under one of the major domestic banks. National Australia Bank and the Commonwealth had both publicly lodged their interest in buying ABN Amro.

However, first NAB and then the Commonwealth ped out of deals rumoured to be worth about $450 million. No reason was given for their withdrawal, although the price is not thought to have been the deciding factor.

RBS was then left with no choice but to hold on to a business it had hoped to sell to help pay for the original takeover. Australia is the last country but one, out of 54, where the respective RBS and ABN Amro businesses have been brought together.

ABN will continue to operate separately until the end of the year while RBS gets approval from the Australian regulatory authorities for the merger.

Once approved, the merger is set to be completed early next year with the new division operating under the Royal Bank of Scotland brand.