Royal Bank of Scotland is to break up RBS Asset Management and sell off half of the division for about £300 million ($475 million), The Times reports, adding that RBS is believed to want to retain UK-based private bank Coutts.

RBS Asset Management, which specialises in the creation of credit, hedge funds, long-only and private equity funds of funds, managed $50 billion in assets at end-2008. Initial bids from potential suitors are expected next month, according to the report.

RBS, which received a bailout package from the UK government, finished a strategic review of its businesses in February, from which it was decided that a number of assets were “non-core” and would be sold.

In August, the Australia and New Zealand Group bought the retail, wealth and commercial businesses from RBS in Taiwan, Singapore, Indonesia and Hong Kong as well as the bank's institutional operations in Taiwan, the Philippines and Vietnam, for $550 million.

According to media reports approaches for Coutts have been made by several parties, but RBS has remained firm in wishing to retain the private bank, which has the additional cachet of counting the royal family among its clients.

RBS is currently finalising the terms of its entry into the UK government’s Asset Protection Scheme - a deal through which £300 billion of loans will be insured and which may see the government’s stake in RBS increase from 70 to 85 per cent. In its bid to minimise government involvement, RBS is thought to be considering measures such as another share issue and further divestitures.

RBS has previously told this publication that it is not contemplating a sell-off of its wealth management operations.