The Royal Bank of Scotland (RBS) and Lloyds Banking Group are to sell off bank branches in a radical shake-up of the industry.
The restructuring was demanded by the European Union in order to protect competition in the sector after the two were bailed out by the government last year.
RBS, which is 70 per cent owned by the state, is expected to sell branches in England and Wales, its Churchill and Direct Line insurance arm and parts of its Global Banking and Markets investment banking business.
I believe today marks a key milestone in the radical restructuring we are undertaking to bring RBS back to standalone strength," RBS chairman Stephen Hester said.
Lloyds is likely to sell TSB branches in England, Wales and Scotland, mortgage broker Cheltenham & Gloucester and its Intelligent Finance online business.
The bank, which is 43.5 per cent owned by the government, will also seek to raise £21bn, through a £13bn rights issue and a £7.5bn debt swap.
It will pay £2.5bn to avoid joining the Asset Protection Scheme (APS), which provides state guarantees for past toxic loans. RBS will place around £280bn of loans into the scheme, taking the government's stake to 84 per cent.
"The likely costs to the taxpayer and the risks on the impact on the public finances have been reduced," the Treasury said.
On Monday, RBS announced 3,700 job losses in the UK as part of efforts to "modernise" its operations.
