ABOUT 10% of Royal Bank of Scotland's UK branches are likely to be axed, with the institution considering any closure of the last bank in town on "individual merits", a senior executive has revealed.

RBS has about 300 branches in Scotland. It has around 2050 branches UK-wide, including 316 which it has been ordered to sell by the European Commission.

The likelihood of branch closures was revealed yesterday by Ross McEwan, who was appointed chief executive officer of RBS's UK retail banking division last August.

In an interview, Mr McEwan also cited the potential to move existing branches to much smaller premises because far less administrative work and fewer transactions were now done on these sites.

Mr McEwan warned that RBS's UK retail banking workforce would fall further from its current level of about 38,000, but declined to estimate by how much.

He highlighted plans to invest in technology, and in more "points-of-presence" for customers in locations such as shopping malls and railway stations, including automated teller and cash-deposit machines, as part of a previously-announced £700 million, three-year investment programme.

Mr McEwan said RBS now had more than two million UK customers carrying out retail banking activities on mobile devices, with this number having grown from zero only about 15 months ago.

He added: "I think, across the UK, we have probably still got too many branches."

Commenting on the proportion of RBS's 1700-plus branches, excluding those being sold off, which might be closed, Mr McEwan said: "I think probably around the 10 (per cent), possibly less than 10 (per cent). It is not big numbers."

Highlighting scope to cut the size of retained branches, he said: "What I see is the size of a branch getting smaller because you are doing less transactions."

On the question of whether or not the 81%-taxpayer-owned RBS would close the last bank in town as it reduced its branch numbers, Mr McEwan replied: "Every one of those we have to look at (on) their individual merits, because are there alternatives to what we could be doing for those people?"

He added that sometimes communities were getting more service from RBS's mobile vehicle banking service, for which he expressed great enthusiasm, than from a "branch that is open a few hours here and there".

Mr McEwan declared RBS had to make sure communities still had access to services "if we change the bank arrangements".

The issue of banks closing the last branch in a community has proved highly controversial in recent years.

Last year, the Advertising Standards Authority ruled an RBS television advert, showing a bank employee walking through a rural location, standing outside a branch, and claiming the institution would "continue to provide banking services wherever we're the last bank in town", was "misleading".

The ASA noted RBS had said it had closed its branch in Bettyhill, Sutherland, which had been the last bank in that town, but replaced it with a service from its mobile bank which visited for the same hours as the branch had opened.

Ruling the advert must not be shown again in the same form, the ASA said then: "Although we understood that, in Bettyhill, RBS had replaced a bank with a mobile bank, because we considered the ad implied they would retain bricks-and-mortar branches when, in Bettyhill, they had not done so, we concluded that claim ...was misleading."

Mr McEwan revealed plans to announce today the appointment of a managing director of RBS's retail banking operations in Scotland.

Declaring this appointment would mean the Scottish retail banking operation would be represented at a more senior level within RBS, Mr McEwan said: "It has effectively been lower down in the organisation. Given Scotland is our heartland, it is our brand, it is the area that needs to be rebuilt over the next three years because of what has happened to the brand, I am putting in a senior executive in Scotland to take up that role."

Mr McEwan estimated RBS's UK retail banking staff numbers, including operational and technology teams, had fallen by 5% "over the last year or two" to get to the current level of 38,000.

He said: "Over time, those numbers will come down, as we move, effectively, from quite a labour-intensive business to one that is using more technology."

Asked by how much staff numbers might fall, he replied: "At this stage, I wouldn't make a commitment on that."

Mr McEwan, citing slow UK growth and caution among consumers and businesses, said: "There is no major growth in the economy. Banks have got plenty of money to lend, at least we have. If we have not got the growth in demand, we end (up) with lesser numbers of people being employed."

He added technology made it "easier to do stuff without as many staff, long term".

However, he said: "Any restructure is not pleasant. The day you think those are pleasant experiences is the day you should get out of the business."

Mr McEwan said retail banking was not as advanced in the UK as in Australia and New Zealand, and probably also Canada. He joined RBS from Commonwealth Bank of Australia, where he was group executive for retail banking services for five years.

Mr McEwan revealed plans to increase RBS's "points-of-presence" with customers in the UK, comprising automated teller and cash-deposit machine locations as well as branches, by about 500 to around 4000.

He highlighted his aim of moving the RBS brand back to the top of customer opinion surveys, noting it was languishing "near the base of the big banks", and his commitment to UK call centres.