By Marietta Cauchi

LONDON--Brazilian bank Itau Unibanco Holding SA (ITUB3.BR) hasn't approached Royal Bank Of Scotland PLC (RBS) in connection with a bid for RBS' Rhode Island-based retail business Citizens, a person familiar with the U.K. bank told Dow Jones Newswires Sunday.

Earlier, the Sunday Times reported that Itau Unibanco was planning a bid for the 1,500 branch network that spans 12 U.S. states and is reported to be worth as much as 10 billion pounds ($15.6 billion).

RBS has received bids from time to time for Citizens and Chief Executive Stephen Hester has previously said there are 'no sacred cows' and that he wouldn't rule out a sale of any part of the bank's business.

In response to a direct question about Citizens on Friday, Mr. Hester said Citizens is part of the bank's core plans.

"It's a bank where we have improved its performance every single year since we started the RBS change and this last quarter...is another improvement," Mr. Hester said.

"As a result of that, Citizens is much more valuable to our shareholders today than it was three years ago, and I have every confidence that it will be more valuable again three years from now," Mr. Hester added.

RBS, which is 82% owned by the government, continues to restructure operations following its bailout. Under Mr. Hester it has drastically reduced its balance sheet and sold or wound down many of its "non-core" businesses.

The goal is to make the bank smaller and safer and to get the government a return on its investment.

On Friday, the bank said non-core assets were cut by GBP22 billion to GBP72 billion in the first half.

Write to Marietta Cauchi at marietta.cauchi@dowjones.com