Nov. 3--The Royal Bank of Scotland, which nearly collapsed during last year's financial panic, is trying to avoid a possible sale of U.S. banking arm Citizens Financial Group, according to Reuters news service.

The Times of London said British government officials ordered RBS to sell the Providence-based institution, which has more than a dozen Citizens Bank branches in this area. A later government decision to rescind the ordered sale could keep Citizens Bank intact, but European Union regulators still have the option to force divestiture, according to news accounts.

The media have reported that RBS's chief executive, Stephen Hester, considers Citizens a "red line" issue that could weaken his company's chances for recovery if regulators force the bank's sale.

"It remains RBS's goal that any required divestments do not threaten its recovery plan, which is already under way," the bank said.

Local bankers said it's unclear who might be a bidder for Citizens Bank if European regulators force a sale. Not many New England-based banks would be big or strong enough to make an offer, they said, and most large national banking operations are facing their own turmoils.

It's possible, said Gerald D. Coia, president and chief executive of Norwich-based Eastern Federal Bank, that Citizens could be sold off in pieces.

"The big banks have their own issues to deal with," Coia said in a phone interview.

But Rheo Brouillard, president and chief executive of Savings Institute Bank & Trust in Willimantic, said several banks could pull off an acquisition for the whole company, including U.S. institutions Wells Fargo and Wachovia as well as the Spanish Banco Santander, which owns Sovereign Bank in the U.S. Toronto-Dominion Bank and the Royal Bank of Canada are other possibilities, he said.

"It could be anyone looking to pick up a big piece of the U.S. market," Brouillard said in a voicemail message, though he left Bank of America and CitiGroup off the list of possible suitors for various reasons.

The British government owns about 70 percent of RBS, and European competition authorities have been putting pressure on the bank to sell off more assets than previously expected, Reuters reported.

RBS reported losses totaling more than $1.6 billion for the first half of the year, according to The Associated Press.

In addition to the possible sale of Citizens Bank, RBS likely will be forced to sell its insurance business and part of its investment-banking operations, Reuters said. In addition, RBS will need to close more than 300 branches out of nearly 2,300 serving British communities, according to the news service.

A Citizens Bank spokesman referred questions to RBS's corporate headquarters in England, but a phone message there went unreturned. Citizens Bank, whose local operations revolve around its branch on Eugene O'Neill Drive in New London, employs about 24,000 people in nine Northeast states.

"There's tons of speculation," said Citizens spokesman Chris Riley.

Several reports said Citizens Bank's future is expected to be determined by the end of the week, possibly as early as today.

"The press seems widely agreed that RBS will have to divest its insurance operations, its RBS branded branches in England, its NatWest branded branches in Scotland and parts of its investment banking business," banking analysts at CreditSights Inc. said in a research note.

"I wouldn't assume that being a forced seller will get them a really good price," added Jane Coffey of Royal London Asset Management in another note Monday. "The uncertainty continues and the news continues to get marginally worse."

Some uncertainty may be lifted after RBS announces a deal with the British Treasury to insure $530 billion in troubled assets. The agreement is expected to increase the government's stake in the bank to 84 percent.

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