March 18, 2013 / 3:06 PM / 5 years ago

UPDATE 1-UK's RBS to spend 700 mln stg on improving branches

* Investment between 2013 and 2016

* RBS focusing on NatWest brand in London, other key markets

* Plans to re-build RBS brand and grow market share in Scotland

By Matt Scuffham

LONDON, March 18 (Reuters) - State-backed Royal Bank of Scotland is to invest 700 million pounds ($1.1 billion) between 2013 and 2016 in improving its branches, it said on Monday, part of a continuing shift in focus towards its domestic lending business.

The bank, which owns NatWest and Ulster Bank, said the money would be spent on refurbishments across its network of 2,066 branches and initiatives to improve services to its 15.4 million customers within the UK.

RBS, 82 percent-owned by the government, said it would improve complaints handling, allow customers to open accounts more quickly, simplify the processing of mortgages and provide new self-service machines in its branches.

The bank is concentrating on its routine retail operations having cut back its huge investment banking business since it was rescued with a 45.5 billion-pound ($69 billion) state bailout following the 2008 financial crisis.

The government wants it to focus on lending to British households and small businesses.

The new initiatives are part of a strategy set by Ross McEwan, who was appointed head of RBS’s UK retail business in August last year, joining from Commonwealth Bank of Australia, where he was in charge of retail banking services for 5 years.

In a presentation to investors, McEwan said he planned to make RBS the best retail bank in Britain.

“There’s a big space there for it. I’ve not met anyone who believes there’s great retail banking in the UK,” he said.

McEwan said the bank will invest in rejuvenating its NatWest brand, which accounts for 80 percent of its business, and in re-building its RBS brand and growing market share in Scotland.

McEwan faces a challenge in restoring the image of the bank after a computer systems failure caused disruption to millions of its customers last year while the bank faces a 3.5 billion pound compensation bill for mis-selling.

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