Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) (AMS:RBS) announced that it would float a part of its retail business in the US and move away from investment banking in a bid to appease the British Government – who is the biggest shareholder of Royal Bank of Scotland.

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The bank, in which the state holds an 81 percent stake, has laid down a series of steps to handle the government and regulatory pressure and also to focus more on U.K. along with being more capitalized.

Stephen Hester, the Chief Executive of the bank said the bank would list approximately 25 percent of its US based RBS Citizens bank in the coming two years “to highlight the valuable nature of the business.” The bank further decided to cut jobs and cut risk weighted assets to Euro 80 billion ($121.3 billion), from Euro 101.3 billion at the end of 2012.

“We have listened carefully to our majority shareholder,” said Mr. Hester. “We have found a way of uniting the objectives of our majority shareholder, regulator and the other objectives of the company.”

The five year plan, which was focused on transferring the bank into private hands following Euro 45.5 billion government bailout during the financial crisis in 2008 is near completion, according to CEO Hester.

“I believe the light at the end of the tunnel is much closer,” he said, referring to an eventual privatization. There is “another choppy year ahead before we move into more positive times in 2014.”

The bank’s public ownership has gone on longer than expected, mainly due to the reasons like drag of bad loans, conduct issues, and sluggish the UK economy. The bank will be all set to get privatized in the next few years, according to Mr. Hester.

According to an analyst with Nomura, the share sale prior to the next British General election in May 2015 could be possible.

The bank said it has reserved 450 million euros to compensate customers’ mis-sold insurance on loans and mortgages, which totals its provision to Euro 2.2 billion. Around Euro 1.3 billion has been paid out already. Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) (AMS:RBS) has also made provision of Euro 700 million to compensate small businesses mis-sold complex interest rate hedging products.

The annual revenue for the bank came in at Euro 25.79 billion for 2012, a decline of Euro 27.71 billion in 2011. For the fourth quarter the net loss came in at Euro 2.6 billion. However, the Bank showed some sign of improvement, as the impairments at the bank declined year after year.