Both Royal Bank of Scotland and Lloyds Banking Group may be forced to sell of some of their branches to gain European Union approval for restructuring plans, according to the European competition commission.
The two banks have a significant advantage over other banks as they both received state aid last year, which has enabled them to remain at the forefront of the market.
Neelie Kroes of the EU competition commission said at the British Bankers' Association conference, "the likelihood of significant divestments by RBS and Lloyds is strong."
In early June it was reported that Lloyds were taking steps to sell off Insight Investment, and other businesses inherited in its takeover of HBOS.
Royal Bank of Scotland placed some of its Asian businesses on the market in February in order to reduce its £2.4 trillion balance sheet. The sale of RBS' £1.8billion stake in Bank of China was also arranged, in January.
The body that manages the government's holdings in UK part-nationalised banks UK Financial Investments (UKFI), has a 43.5% stake in Lloyds Banking Group and a 70% stake in Royal Bank of Scotland. It was looking into a possible sale of the assets in May this year.
