Under the move, which is designed to balance out the bailout payments the bank has received from the British government, RBS will sell off its insurance, transaction management and commodity trading arms.
It will also lose 40 commercial centres and 300 branches in the UK - the equivalent to five per cent of its corporate banking services' market share.
Competition commissioner Neelie Kroes welcomed the move but warned that the EC was serious in ensuring the sell-off went ahead.
"But be aware that in case RBS does not deliver on its balance sheet reduction targets by 2013, the commission will be able to intervene again and more divestments will be required," she stated.
Lord Myners, UK financial services secretary, said he hoped the deal would pave the way for the public to get a return on its investment in RBS.
By Tony Aynsley