Royal Bank of Scotland is preparing to cut more than £800m of annual operating costs by eliminating jobs and closing branches as it seeks to bolster profitability, said a person with knowledge of the plans.

While the Edinburgh-based lender will probably not reveal a headline figure for role reductions, senior executives have determined RBS has more staff than it requires and will cut more jobs, said the person, who asked not to be identified because the details are private.

RBS has said it will unveil fresh plans to meet profit targets alongside annual results on 24 February. The Sunday Times, citing an analyst it did not identify, said RBS needed to cut 15,000 jobs. An RBS spokeswoman, who declined to comment on the plans, said of The Times story: “We do not recognise this report.”

Chief executive Ross McEwan’s plan to lower the bank’s cost-to-income ratio, a key measure of profitability, to below 50 per cent by 2020 was blown off-course after the Bank of England cut interest rates last year. He probably needs to remove about £800m of annual expenses to reach his target, analysts at UBS Group led by Jason Napier wrote in a note to clients last month.

“Given all the restructuring RBS has already undergone, such a change from here would be challenging and expensive to deliver,” Mr Napier, who has a neutral rating on shares, said.

RBS shares climbed 1.0 per cent to 231.1p in London. The stock is up 2.9 per cent this year, after dropping 26 per cent in 2016.

Business news: In pictures Show all 13 1 /13 Business news: In pictures Business news: In pictures Flybe collapses Airline Flybe has collapsed. All future flights on the Exeter-based airline have been cancelled – leaving more than 2,300 staff facing an uncertain future, and wrecking the travel plans of hundreds of thousands of passengers. The chief executive, Mark Anderson, said: “Europe’s largest independent regional airline has been unable to overcome significant funding challenges to its business. AFP via Getty Business news: In pictures Future product placement will be 'tailored to individual viewers' Marketing executives say that product placement in films and televison shows on streaming services such as Netflix may be tailored to individuals in future. For instance, if data shows that a viewer is a fan of pepsi, a billboard in the background of a shot would host an advert for pepsi, while for a viewer known to have different tastes it could be for Coca-Cola Paramount Business news: In pictures Corbyn wishes Amazon a happy birthday In a card sent to Amazon CEO Jeff Bezos on the company's 25th birthday, Labour leader Jeremy Corbyn writes: "You owe the British people millions in taxes that pay for the public services that we all rely on. Please pay your fair share" Business news: In pictures No deal, no tariffs The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers Getty Business news: In pictures Fingerprint payment NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user's fingerprint NatWest/PA Wire Business news: In pictures Mahabis bust High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019 Mahabis Business news: In pictures Costa Cola Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant PA Business news: In pictures RIP Payday Loans A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain's biggest, went into administration on August 30 PA Business news: In pictures Musk irks investors and directors Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks Getty Business news: In pictures Jaguar warning Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a "bad" Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks AFP/Getty Business news: In pictures Spotif-IPO Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn't issuing shares, but rather, shares held by Spotify's private investors will be sold AFP/Getty Business news: In pictures French blue passports The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July. The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process. Business news: In pictures Beast from the east economic impact The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.

RBS’s cuts may need to exceed £800m, the person said. David Lock, an analyst at Deutsche Bank, wrote in a note this month that he expects RBS to target a total cost base of £7bn by 2020, which would necessitate cutting £1.5bn to £1.6bn pounds of expenses.

The lender will probably cut administrative roles and eliminate staff for tasks such as opening bank accounts, the person added. While RBS will look to cut costs, the lender will also consider investing in upgrading its IT systems to improve efficiency and lower expenses, the person said.

While the plan is aimed at reducing the long-term cost base, it could boost expenses in the near term. RBS spent £4.4bn in the past two years in its effort to cut ongoing costs by £1.8bn, Mr Napier wrote. The new effort could have the effect of reducing any excess capital that could otherwise be used for buybacks and dividends, he said.