DUBLIN (Reuters) - State-backed British lender Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) has been formally advised by Morgan Stanley (>> Morgan Stanley) to sell a majority stake in its Irish unit, Ulster Bank, Ireland's Sunday Business Post reported.

RBS commissioned the investment bank earlier this year to advise it on potential merger opportunities for Ulster Bank, the biggest bank in Northern Ireland and the third largest in the Republic of Ireland.

An announcement could be made as early as next week and could trigger a formal bidding process, the Sunday Business Post said, without quoting any sources.

RBS said on Friday that attracting private equity firms to inject cash into its Irish arm was one of several options it was considering as part of a restructuring of Ulster Bank.

The Irish Examiner said last week that RBS was considering selling Ulster's operations in the Irish Republic to a private equity firm in a proposed deal that would leave in place the current management team under Chief Executive Jim Brown.

RBS chief executive Ross McEwan told reporters on Friday that the bank was looking at the opportunities it had for Ulster Bank and would be in a position to discuss them "probably in the next two or three months."

An RBS representative declined to comment on the Sunday Business Post report.

(Reporting by Padraic Halpin; Additional reporting by Matt Scuffham in London; editing by Keiron Henderson)

Stocks treated in this article : Morgan Stanley, Royal Bank of Scotland Group plc