The study by investment bank Rothschild has advised Chancellor George Osborne on the merits and pitfalls of separating operations such as Ulster Bank and £40 billion of non-core loans in order to accelerate the privatisation of the remaining good parts.
Mr Osborne is backing away from the idea of a radical "good" bank "bad" bank split according to a weekend report. He will instead press for a speedy run-down of around £50bn problem loans.
According to UBS, the 80% state-owned bank is expected to report flat profits of £1.1 billion from core operations in the three months to the end of September.
Taxpayer-backed Lloyds Banking Group and rival Barclays will both update the City on their third quarter performance amid a period of upheaval for both businesses.
The trading update for Lloyds tomorrow will be the first since the Treasury began the process of returning its stake in the bank to the private sector, selling a 6% chunk for £3.2 billion to institutional investors last month.
The Lloyds group, which also includes Halifax Bank of Scotland, swung out of the red with half-year profits of £2.1 billion earlier this year.
Credit Suisse analysts expect third quarter pre-tax profits of £793 million, with £300 million restructuring charges and £300 million provision for customer redress following PPI and other mis-selling claims.
Meanwhile banking giant Barclays received strong support earlier this month for a £5.8 billion rights issue offered as part of a plan to meet the City regulator's demand that it plug a £12.8 billion hole in its finances.
The issue saw 95% of shares taken up, with the remainder offered in the wider market.
BT unveils second quarter results on Thursday amid concerns that it has overestimated the size of the market for its TV sports channels as it vies with BSkyB over Premier League football coverage.