EDINBURGH ( TheStreet) -- Royal Bank of Scotland ( RBS) is in the process of working on a government-backed plan to sell all of its 312 RBS-branded branches in England and Wales in order to satisfy European authorities, the Financial Times reports.

Neelie Kroes, the EU competition commissioner, demanded substantial disposals by RBS to compensate for the huge amount of taxpayer support that it had received earlier and also its planned participation in a government toxic asset insurance scheme.

Particularly, the EU is keen to see a 10% reduction in RBS's small business banking operations. This reduction could be achieved through a disposal of the Scottish group's RBS branch network south of the border which serves about 1 million small corporate customers, the Financial Times reports. The divestment could be done via a sale to a rival or to private equity. A stock market listing also is seen as an option.

In order to prepare for the float, RBS drew up plans to sell branches in England and Wales and rebrand it under the defunct Williams and Glyn's name. Meanwhile, the NatWest branches, the group's main brand in England and Wales, would remain unaffected.