RBS names Ulster Bank chief as boss of Williams & Glyn

* Brown will lead business towards IPO next year

* Maltby will resume role as advisor to investors (Adds comments from RBS CEO, background on changes)

By Matt Scuffham

LONDON, April 28 (Reuters) - Royal Bank of Scotland (LSE: RBS.L - news) said it had appointed Jim Brown, currently boss of its Irish business, to replace John Maltby as chief executive of its Williams & Glyn business, which is due to become a new UK "challenger" bank.

RBS was ordered to sell Williams & Glyn, which comprises 314 branches and is focused on lending to small businesses, by European regulators as a condition of its 46 billion pound ($70 billion) government bailout during the 2007-09 financial crisis.

Brown has overseen a turnaround in the fortunes of Ulster Bank, benefiting from the improving Irish economy and write-backs on problem loans, prompting RBS to decide to keep the business following a strategic review.

"Jim Brown brings a wealth of experience in retail and commercial banking and will lead the business as we move forward towards an IPO (initial public offering) in the second half of 2016," said RBS Chief Executive Ross McEwan.

RBS said Maltby would resume his previous role as advisor to a consortium of investors in Williams & Glyn, led by U.S. private equity firm Corsair, which holds a 49 percent stake in the business.

Maltby, previously head of commercial banking at Lloyds , became chief executive of Williams & Glyn in January last year and had been expected to lead the business through its stock market flotation, with the intention of subsequently building it into a significant rival to Britain's biggest banks.

Sources said the decision to change Williams & Glyn's leadership had been made jointly by RBS and the investor consortium, which also includes the Church of England.

RBS said that Brown would remain in position at Ulster Bank to support the board in identifying his successor. ($1 = 0.6547 pounds)