Unnamed sources close to the matter stated that the move is part of a bid by the company to boost its reputation among investors and restructure its debt, the Financial Times reported.
The bank is expected to buy back the proportion of its Â£28 billion debt at premium prices.
Bruce van Saun, finance director at RBS, is thought to be currently drawing up the final details of the plan, which could be unveiled within a matter of weeks, sources told the newspaper.
RBS is considering following a plan recently undertaken by Rabobank in the Netherlands where the institution issued a â¬1.25 billion ($1.7 billion) ten-year contingent senior bond.
The bank is 70 per cent owned by the UK government and is currently paying the Treasury a four per cent fee for an Â£8 billion capital facility.
Earlier in the year RBS unveiled its plan to pay top investment bankers over Â£1 million in bonuses for 2009.
The firm recorded a loss of Â£3.6 billion for last year.
By Jim Ottewill