The Conservative-Liberal Democrat coalition could see returns on the bailout as early as the first half of 2012, with the first stage of the process seeing sales to institutional investors and sovereign wealth funds from the Middle East and Far East, the Daily Telegraph reports.
A sum of Â£5 billion would calculate at around 13 per cent of the taxpayer stake in the bank, the newspaper added.
UK Financial Investments - which was set up by the Treasury to look after the government's stakes in RBS and Lloyds Banking Group - will launch the sale.
An equity research note from Barclays Capital read: "RBS is well on the way to achieving many of its targets and has done much of the hard work on restructuring its balance sheet and refocusing its business."
RBS recently posted losses of Â£528 million for the first three-month period of 2011.
By Tony Aynsley