The move, announced only days before next week's results announcement from its parent, NatWest Group, was seen as a prelude to a possible disposal of the troubled investment bank.
The reorganisation, which also included the appointment of a little-known insider as chief executive, was greeted with scant enthusiasm in the City, where analysts thought it would do little to reverse the recent underperformance of NatWest's shares, which closed a further 7p lower yesterday at 859.5p.
One dismissed it as "just a matter of rearranging the deck chairs on the Titanic".
Another saw the move as a "damp squib", saying it was not clear what the restructuring would achieve in the long term, other than making the investment bank more saleable.
It had been hoped that NatWest would announce the disposal of NatWest Markets, a move that could have paved a way for a full-scale bid for the rest of the group.
The appointment yesterday of Konrad "Chip" Kruger as chief executive of NatWest Markets was seen as a tacit admission by the bank that it had been unable to attract a heavyweight outsider to restore the bank's fortunes after a series of recent embarrassments, including a heavy derivatives loss and the dismissal of its chief executive.
Mr Kruger joined NatWest in October 1996 at the time of the acquisition of Greenwich Capital Markets, one of a series of deals that have seen the bank spend more than pounds 1bn on building up its presence in investment banking.
Speaking after his appointment, he said: "Like many of our investment banking peers, we have experienced a period of intense scrutiny. Despite these distractions, we remain focused on delivering the results that clients, shareholders and employees expect from a first class business."
NatWest's policy of combining its predictable high street retail banking operations with a more volatile investment bank has come under increasingly critical scrutiny in recent months ever since a pounds 90m loss was discovered in its derivatives operation.
The loss, and a subsequent cover up of the problem, has resulted in half a dozen resignations from the investment bank, including that of Martin Owen, its former chief executive.
That has thrown the spotlight on the future of NatWest Group itself, especially after it emerged that preliminary takeover talks had taken place between its senior management and both Abbey National and the Prudential.
Yesterday's announcement trailed the formation of a new unit to be called Global Financial Markets, which will be used to transfer NatWest Markets' treasury, foreign exchange, interest rate trading, money markets and currency options businesses back into the group.
The new division will be headed by Stephan Harris, who is currently group treasurer.
Analysts said the remaining equity, bond and advisory arms would make a more acceptable package for an overseas buyer, if that became NatWest's preferred option, although it is thought NatWest remains committed for the time being to attempting to build up a meaningful presence in global investment banking.