LONDON, JAN 6 - Royal Bank of Scotland named a new head of strategy on Friday to help the taxpayer-backed bank's turnaround, which has been slowed by regulatory and economic headwinds.

RBS said Richard Kibble will join as director of strategy and corporate finance in March. Kibble joins from PricewaterhouseCoopers (PwC), where he has been a partner since 2008 and currently leads its corporate strategy team focusing on financial services.

RBS Chief Executive Stephen Hester is halfway through a five-year plan to transform the bank after it needed a 46 billion pound taxpayer bailout, leaving the UK owning 83 percent.

Hester has been aggressively shrinking RBS and he plans to further cut the size of its investment bank. McKinsey is conducting that review, which is expected to be delivered in the coming weeks.

Europe's banks are reshaping in the face of more stringent regulations, and British lenders have to separate their domestic retail operations to reduce the risk of a taxpayer bailout again in the future.

A deteriorating economy is adding to headwinds, forcing Hester to in November push back his profitability and cost control targets to beyond his original 2013 target.

There is a high risk of a renewed deterioration in bad debts this year, analysts at Barclays Capital warned on Friday, which could result in 13 billion pounds of impairments at RBS and 20 billion at Lloyds in 2012.

(Reporting by Steve Slater; Editing by Hans-Juergen Peters)