Royal Bank of Scotland (RBS) will next week launch a radical restructuring of its corporate banking division as part of a wider overhaul of the taxpayer-backed lender.

Sky News has learnt that Ross McEwan, the new chief executive of RBS, will outline plans on February 27 for a revamp that will involve Chris Sullivan, the chief executive of corporate banking, moving to a different role at the group.

The corporate banking arm will be significantly reshaped, with the introduction of a range of new services designed for small and medium-sized business (SME) customers and SME lending potentially placed in the hands of the retail bank.

Mr McEwan's attempt to reshape the bank around the needs of different customer constituencies will be partly aimed at defusing some of the criticism aimed at RBS over its track record at lending to SMEs since its taxpayer rescue in 2008.

More than £45bn was ploughed into RBS to keep it afloat, and the Government's 81% economic stake in the bank has been used as a stick to repeatedly beat its executives despite their protests about a dearth of customer demand for loans during a period of economic stagnation.

In recent months, the bank's attitude to struggling business customers has come under renewed scrutiny, including a highly critical report by a former deputy governor of the Bank of England.

The City watchdog is now overseeing an inquiry into the conduct of RBS's Global Restructuring Group, although the fate of that division is unlikely to be determined until after the regulator's probe has been concluded.

Mr Sullivan has run RBS's corporate bank since 2009, and sits on the group's 10-person executive committee.

A former head of its insurance operations, which until recently included full ownership of the Direct Line and Green Flag brands, Mr Sullivan has worked for RBS since the mid-1970s.

He has also run its retail direct operation, been deputy chief executive of retail markets and had a stint as chief executive of Lombard, the asset finance provider owned by RBS.

A City source said that Mr McEwan was keen to retain Mr Sullivan in a senior role, particularly in the context of the scale of the anticipated changes at the bank.

That review, established by George Osborne, the Chancellor, recommended the introduction of a ring-fence between high street and investment banking operations, with the rules due to take effect by 2019.

RBS declined to comment on the change to Mr Sullivan's role or the dismantling of the corporate bank.

Mr McEwan's broader strategy review, under the codename Project Cook, will result in tens of thousands of jobs disappearing over the next five years.

The bank's workforce is already one-quarter smaller than the 161,000 people who were employed by it when taxpayers injected £45.5bn to rescue it in 2008.

More than 40,000 people have left RBS since then, many through redundancy, with others leaving as part of the sale of dozens of businesses by Stephen Hester, Mr McEwan's predecessor.

People close to Project Cook said that Mr McEwan would further shrink RBS's markets and international banking operations, as well as setting out plans for greater automation of high street banking services.

Over time, this would result in far more cost-effective operations that would require a smaller headcount, they said.

In a video posted on RBS's website earlier this week, Mr McEwan said his aspiration was "not to run the world's largest bank; it is to run the UK's best one".

"A lot of our costs are old costs related to a big global group that we are not any more," he said.

"We are too bureaucratic, we take too long (and) we are not focused on the customers' needs. Don't confuse when I talk about taking costs out with how do we serve customers.

"My view is you do both: you serve customers better, and you strip a lot of costs out."

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