Top retail banks set for shake-up

DISPOSALS

Both banks also will face asset sales to satisfy Brussels.

RBS said on Monday it will be forced to sell more assets than expected but said it was sticking to its turnaround plan.

It also said it would axe another 3,700 jobs from its UK retail business. RBS has already shed 16,000 of its 165,000 staff globally since October 2008, including 10,000 job cuts in Britain.

EU authorities are set to force RBS to sell its insurance arm, to dispose of over 300 branches to cut back its slice of the small and medium enterprise banking market, and to shrink its investment bank, people familiar with the matter said.

RBS is already shrinking the balance sheet of its Global Banking and Markets investment banking arm, but could be forced to dispose of assets including Sempra, its commodities unit.

The deal should, however, avoid the sale of its prized U.S. retail arm Citizens, sources close to the deal said on Saturday.

The harsher than expected terms sent RBS shares tumbling, to close 7.8 percent lower on Monday at 38.5p, off earlier lows.

Markets have been worried that Brussels is taking a hard line with banks who took state aid, after imposing big changes on Dutch bancassurer ING Group NV last week.

LLOYDS