The announcement comes as the UK government prepared to set out tomorrow plans to break up Royal Bank of Scotland and Lloyds Banking Group.

Royal Bank of Scotland, which was released by the UK government in the come around of the global financial crisis, plans to axe about 3,700 jobs across its retail operations in Britain.

RBS said it would consider selling more assets than initially planned in order to mollify European Commission concerns are set to be revealed.

Banged by global financial crisis, RBS plans to cut off about 3,700 jobs across its retail operations in Britain within the next two years. Given that its total workforce of 170,000, of which 105,000 are in the UK, the firm has already unveiled 10,000 job cuts in its investment banking and back office activities in the UK, and additional 6,000 redundancies in overseas operations.

Within the time period of 4 years, both the Banks are expected to sell off their branches, given that RBS which is 70% owned by the taxpayer is probable to sell branches in England and Wales, and its Churchill and Direct Line insurance businesses.

While, in order to avoid a taxpayer-backed insurance scheme for toxic debts, Lloyds which is 43.5% owned by the state, is set to disclose a £21 billion fundraising, including a reported £13.5 billion rights issue. The Bank is moreover liable to divest its Cheltenham & Gloucester branches, in addition to its Intelligent Finance online business, and Lloyds TSB branches in Scotland.

The European Commission has demanded that banks bailed out by taxpayers should be scaled down. "This will be a big day for British banking, the latest chapter in the bailout saga," says BBC chief economics correspondent Hugh Pym. However, he says that it "remains highly uncertain" that the asset sales will attract new players into the banking market.

It is expected that, with the new high investments from the bailed-out lenders and the parts sold in the next few years to new entrants to the sector, who would contemplate on deposits and mortgages.