The lender, which is still 73 per cent owned by the Government, is required to separate its investment banking operations from its high street arm by 2019.
“In order to be compliant with its requirements, we need to undertake a significant reorganisation of our current legal entity structure and business model,” the bank said Royal Bank of Scotland has said it will complete the ring-fencing of its retail banking operations by the end of 2018.
The group said NatWest will become its main customer-facing brand in England and Wales and Western Europe, while in Scotland RBS will be its core brand.
Its investment banking arm will become known as NatWest Markets.
Chief executive Ross McEwan said: “Our proposed future structure under the ring-fencing legislation and our brand strategy are key elements of the bank we are becoming.
“The future ring-fenced structure of the bank is not only designed to be in compliance with the new regulatory requirements and objectives but will better reflect who we are as a bank and what we stand for: a bank that is focused on its customers.”
Earlier this week, RBS revealed that it is to pay 1.1 billion US dollars (£845 million) to a US regulator to settle two claims over mis-sold mortgage bonds in the run-up to the financial crisis.
RBS also faces further potentially large settlements over mis-selling of mortgage securities turned sour in the US, with claims still outstanding with the Federal Housing Finance Agency and US Department of Justice (DoJ).