LONDON—Royal Bank of Scotland PLC, the mostly government-owned U.K. bank, Thursday unveiled a broad-ranging restructure to prune back large parts of its investment banking operation, which will see the unit shed a further 3,500 jobs over a three-year period.

In total, around one-third of the headcount of RBS's 19,000-strong investment banking unit will have been pruned back by the end of the restructure. RBS in 2011 announced around 2,000 job cuts.

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