Royal Bank of Scotland’s investment banking arm has cut back its structured finance operations in the US after a slump in demand following the meltdown in the American subprime mortgage market.

In a sign of how quickly investment banks are moving to scale back businesses hit by the turmoil, RBS said it had shed a quarter of the just over 20 staff on its collateralised debt obligation team, which repackages mortgage-backed securities and other instruments. Rick Caplan, co-head of CDOs at RBS Greenwich Capital, the bank’s US capital markets subsidiary, left two weeks ago as a result of the cutbacks.