The bank said it had appointed PricewaterhouseCoopers to advise on the sale of its Luxembourg-based fund management business, which had 28.5 billion euros (20.5 billion pounds) in assets under administration at the end of last year.

"In line with our strategy to make RBS a smaller, more focused bank, we have taken the decision to sell RBS (Luxembourg) S.A.," the bank said in a statement. It said the first phase of the process was "well under way" and it was working with PwC "to select a limited number of potential buyers" to continue discussions with.

(Reporting by Steve Slater; Editing by Nishant Kumar)