Scotland braced for "radical restructuring" at RBS and Lloyds

Very large and possibly dark clouds are gathering around Scotland's retail banking sector as both RBS and Lloyds TSB prepare to outline plans to scale down their business to the European Commission. There's a chance, however, that this might not lead to yet more massive job losses.

The two banks, which between them have received 35bn in government aid, have promised to pull back from certain markets and sell non-core businesses in an attempt stave off possibly draconian measures from the European Commission.

RBS says it will dispose of 240bn of non-core assets and was gearing up for "the most radical restructuring ever undertaken in the banking sector, including major asset and business disposals."

Lloyds says it's still "too early to tell" how exactly it will restructure its operations, but the FT suggests that it could hit Scotland particularly badly.

Lloyds may be required to sell either its Halifax or Bank of Scotland branch network to comply with European antitrust rules - a move RBS may also have to echo at a retail level.

Lloyds has announced 8,200 layoffs since its merger with HBOS, and the EC seems keen to avoid imposing requirements that will exacerbate the need for redundancies. It says Lloyds will need to make a "viable carve out" that will not lead to job cuts.

RBS has been pulling back from its wholesale banking business, as well as offloading its retail arm in Asia, but the Times suggests its now turning its attentions to its European divisions.

If you're looking for a sanctuary within RBS, you might want to consider its "workout" unit - the team that assists borrowers who have hit hard times. Bloomberg says the unit has expanded from 150 people to over 600, and we understand at least some of these roles are in Scotland.

Most people, however, were transferred internally.