The former branch – which has lain vacant for several years – will be named ‘The Edinburgh Grand’ and turned into 50 serviced apartments, with space for bars, restaurants and shops.
It’s the latest development amid a number of huge changes to the square, as well as the nearby Register Lanes and St James Centre projects.
The property – which holds a grade A listing – was built over six years between 1936 and 1942, with the original architects basing its style on American bank buildings in the 1930s.
It previously served as the headquarters for the National Commercial Bank of Scotland, before becoming the global office for RBS, however fell into a state of neglect after the bank departed for its new HQ at Gogarburn eight years ago.
It was briefly the city base for Ukio Bankas, the Lithuanian bank run by former Hearts chairman Vladimir Romanov.
Developers Lateral City already have an established presence in the city, with similar projects in the Old Town and Merchiston opening in the last few years.
General manager Gavin MacLennan believes the plans will give the historic building a new lease of life.
“42 St Andrew Square is a building full of history and heritage,” he said.
“After years of being closed to the general public, we’re excited to be working on what will become the pride of the city when complete.”
Architects The Chris Stewart Group, which also worked on Lateral City’s other projects Edinburgh, insisted they intended to retain as many of building’s original features as possible.
“There are details around almost every corner which we keep uncovering, with a whole raft of original fixtures and fittings still visible,” said Chris Stewart, the company’s chief executive.
“This development is part of a wider plan to create a vibrant, active area in a prestigious part of the city – which has been neglected for many years – by providing an attractive and safe environment for all.”
However, heritage group the Cockburn Association said it had concerns about the amount of development in St Andrew Square.
Marion Williams, its director, said: “Obviously It’s good to see a listed building retained and renovated, especially as we’ve lost so many listed buildings on and around St Andrew Square recently.
“However I would hope to see a serious rethink of the overuse of St Andrew Square in line with developments such as this.
“Tourism is getting a big bite of the cherry in Edinburgh and we want to see more done for the residents across the city to redress the balance.”