The Royal Bank of Scotland, Northern Rock, and Lloyds Banking Group are to sell off as many as 700 branches in the next few years in exchange for the public aid they received during the economic meltdown, a government official told The Associated Press on Saturday.

The official said that the banks were in negotiations with Britain's treasury and European regulators over how many assets they would have to give up in return for the help they received from taxpayers.

"Essentially, they are expected to have to divest — each of them — some of their branches," he said.

He said that as many as 700 branches could be sold off.

The branches would be reserved for new entrants to the British banking market, creating three new banks over the next five years or so. Established players such as Barclays PLC or the Spanish Banco Santander S.A., which owns three U.K. businesses, would not be allowed to bid for the businesses.

The official warned that the figures were subject to change, and spoke on condition of anonymity because the moves had yet to be finalized.

The shake-up would come after Britain pumped billions of dollars into its banking sector in an effort to stave off the collapse of its financial system in the wake of the credit crunch. Northern Rock PLC was nationalized early last year after it struggled to raise funds from crunch-hit wholesale lending markets. The government has significant stakes in both the Royal Bank of Scotland Group PLC and the Lloyds Banking Group PLC.