The British bank is planning to sell off Citizens in several chunks as part of its wider plan to cut down overseas operations to focus on the UK market.
Its main plan is to sell 25 per cent of the US bank in an initial public offering in spring 2015, reducing its stake in the lender and raising capital.
But an alternative would be to sell the bank to another lender which wanted to focus on the US market. That could include Canadian lender TD Bank which the Sunday Times reported is interested in Citizens, which is worth around £8bn.
RBS and TD Bank declined to comment on the possible deal.