NatWest is believed to be considering a break-up in a bid to thwart a takeover bid by the Bank of Scotland. Banking sources say the bank is looking at selling off about £5bn ($8.26bn) of its non-core assets, including Ulster Bank, Coutts, and asset management unit Gartmore.

It would then use the proceeds to pay a special dividend or buy back shares in an attempt to convince shareholders that its shares are worth more than £15 - instead of the £12.65 being offered by the Bank of Scotland.

Bank of Scotland had already said it would sell off many of NatWest's non-core businesses if its takeover bid was successful.

The bank is thought to be considering shake-up of its operation in preference to searching for a "white knight" merger partner to fight the £21bn takeover by the smaller bank.

A source close to the bank said: "The go-it-alone route is clearly a very viable one and something we are looking at."

"Selling these assets and returning capital would clearly be one of the things they would be looking at."

NatWest investors and city analysts have been largely welcoming of the Bank of Scotland bid.

However, banking unions fear it could lead to as many as 30,000 job cuts.

The sell-off is the first sign that NatWest is ready to go it alone to stand up to the bid.

The Bank of Scotland move has sparked interest in NatWest from a number of other potential suitors, including HSBC and the Royal Bank of Scotland.

Other names being mentioned in connection with a bid include Abbey National - and European candidates such as France's Societe Generale and the Dutch bank ING Barings