RBS to cut 3,700 UK jobs

By Clara Ferreira-Marques

LONDON (Reuters) - Royal Bank of Scotland said it would be forced to sell more assets than it had expected and axe 3,700 jobs from its retail business as another radical shake-up loomed for Britain's banks.

European competition authorities are set to force RBS to sell its insurance arm and over 300 branches, and shrink investment banking operations, according to people familiar with the matter.

The worse-than-expected terms sent shares in part-nationalised RBS down 8 percent on Monday.

RBS said it was consulting with staff and representatives over a restructuring of its retail banking division which would see 14 percent of staff at its 2,268 British branches losing their jobs.

The cuts come with RBS having already shed 16,000 of its 165,000 staff globally since October 2008, including 10,000 jobs in Britain.

The bank said it had 30 percent more staff carrying out administrative duties per customer than competitors in Britain but was under-invested in its branches and customer infrastructure.

"We need to do better for all customers and shareholders by modernising the way we operate as a bank," said Brian Hartzer, chief executive of UK retail, wealth management and Ulster Bank.

RBS and Lloyds Banking Group have been locked in negotiations for months with the British government over an insurance scheme for bad debts and are in parallel talks with the Treasury and EU over measures to compensate for billions received in state aid.