ROYAL Bank of Scotland is reported to have lined up former City regulator Sir Howard Davies as its new chairman.

The bank, which is about 80 per cent owned by the tax payer, could announce Sir Howard as the replacement for Sir Philip Hampton this week, according to reports.

Sir Howard, a former head of the Financial Services Authority, is expected to take up the role in the summer.

A spokesman for RBS said the bank had no comment to make on the speculation.