The Royal Bank of Scotland (RBS) has confirmed job losses are "inevitable" as the lender integrates ABN Amro's global markets division.
The Financial Times reported the bank is planning to cut around 7,000 jobs about 25 per cent of its workforce after leading a consortium in a 71 billion takeover of ABN Amro.
The Scottish bank announced a £12 billion rights issue last week to boost its capitalisation, which was dented by the October 2007 takeover of the Dutch lender.
An RBS spokesperson said: "Since the acquisition of ABN Amro we have consistently said that as we brought our two wholesale banking businesses together there would be job losses over the course of the next two years.
"This is unfortunate, but inevitable.
"In light of current conditions in some parts of the global credit markets we are also looking at the appropriate size for our businesses affected by this downturn."
The bank added that it is in regular dialogue with its staff and would provide appropriate support and guidance throughout.
The Financial Times said RBS was expected to start writing to staff just below senior management level as early as Wednesday as part of a consultation process likely to take four to six weeks.
However, RBS did not comment on the size of the potential cuts.