Royal Bank of Scotland unit Citizens Financial Group said it will be divesting retail branches and its small business operations located in the Chicago area to US Bancorp, The New York Times The Dealbook reported. Under the terms of the deal, a banking unit of US Bancorp will buy deposits worth about $5.3 billion and loans amounting to $1.1 billion. The acquisition will give the unit around $11.3 billion in deposits in the Chicago area.

The bank will buy 94 branches which are operating under the Charter One Bank brand. The transaction will include the 800 employees of the branches and is expected to be completed in the middle of this year.

John Elmore, the Vice Chairman of Community Banking and Branch Delivery for the banking unit of US Bancorp, said, "This transaction will double our market share in Chicago, giving us a great opportunity to not only deepen existing customer relationships, but a chance to serve new customers with our extensive mix of products and services." Citizens Financial will continue to retain a presence in the Chicago area after the deal.

Citizens Financial Chairman and Chief Executive Bruce Van Saun said the deal is part of the effort of Citizens Financial to concentrate its operations on the markets where it plays a leading position or has better growth prospects for the long-term, the report said.

As of September 30, US Bancorp had assets of $361 billion. It operates in 25 states and has over 3,000 banking offices.

Meanwhile, RBS continues to be 81% owned by the British government after it was rescued in the height of the financial crisis. RBS said last year that it intended to divest assets and reduce its investment banking business so it would be able to boost its balance sheet and refocus its operations, the report said.