April 1 (Bloomberg) -- Protesters clashed with police outside the Bank of England and broke into a Royal Bank of Scotland Group Plc branch in demonstrations on the eve of the Group of 20 meeting in London.

Police in riot gear, on horseback and with dogs moved in to surround demonstrators who smashed windows and entered an RBS branch near the central bank in London’s financial district, the City. Officers removed protesters from the building.

Some 32 people were arrested, police said. They include 11 suspects found with police uniforms after officers stopped a modified military personnel carrier near RBS’s London headquarters in Bishopsgate. One officer was hospitalized for injuries, Metropolitan Police Commander Simon O’Brien told reporters at the force’s offices in Scotland Yard.

As many as 5,000 marchers were outside the Bank of England for the noon protest, called “Financial Fools Day,” police said. As the demonstrators assembled, pre-summit talks started with a visit by President Barack Obama to Prime Minister Gordon Brown’s Downing Street residence.

“This is about making it shameful to be a banker,” said Annabel Acton, 25, a consultant. “I’ve come here today so we can engage in a peaceful protest and vent our anger against the greed of the financial institutions. They are dealers in death and intent on oppressing us.”

‘Hardcore Protesters’

Many protesters near the Bank of England had dispersed by the time City workers began their evening commute. Lines of police officers held their positions around the central bank to control demonstrators who stayed, described by O’Brien as “the hardcore protesters.”

A figure was burned in effigy, a small fire was started in the road outside the bank and clashes broke out between police and protesters just after 7 p.m. Roads in the area remained closed.

A second demonstration, organized by anti-war activists, began around 2 p.m. near the U.S. Embassy at Grosvenor Square and drew a crowd estimated by police at about 750 people.

This week’s operation may be the biggest for the U.K. capital’s police since the hunt for failed suicide bombers in July 2005 and comes amid a worldwide economic decline. Many City workers dressed casually, spurning traditional business suits and heeding warnings that they should avoid becoming targets for protesters.

RBS was rescued by the U.K. government, and former Chief Executive Fred Goodwin was widely criticized for accepting a 703,000-pound ($1 million) annual pension.

Police Videotape

Police will review videotape of violent incidents such as those at RBS to identify the perpetrators, O’Brien said. “It’s up to us to choose the right time to knock on their door and say hello,” he said.

The commander said the force’s strategy of avoiding confrontation and heavy-handedness with the protesters proved successful in preventing further violence.

“The tactics used were the right ones,” he said.

About 10,000 police officers will be on duty through this week to oversee the protests and to ensure the safety of world leaders who meet tomorrow at the Excel Centre in the east of the city. About 5,000 officers were deployed in November 2003, when then-President George W. Bush came to London for a state visit.

Organizers said the protests, which include a range of groups from climate-change activists to anarchists to unemployed workers, were planned to be peaceful. The Metropolitan Police had warned of possible violence, and financial institutions beefed up security.

Scuffles With Police

Marchers scuffled with police in riot gear near the Bank of England. One officer was hit in the head with a stick by a protester, and several demonstrators with bloodied heads were seen near the bank.

There was also a carnival atmosphere, with marchers carrying whistles, drums and signs reading “abolish money,” and “capitalism kills.” They hung the effigy of a banker from traffic lights and scrawled “built on blood” on the wall of the Bank of England.

“I’m protesting on behalf of over-50s who have been prudent with savings all their lives and are now getting nothing on their savings,” said Neil Scanton, 55, a computer consultant who is out of work. “I’m just an average guy, not an anarchist or anti-capitalist. There are thousands out there like me who are very angry.”

U.K. unemployment rose to more than 2 million in February as more people joined jobless rolls than at any time since 1971.

‘People First’

As marchers passed a KBC Groep NV bank building on Old Broad Street, workers in casual clothes watched from inside as protesters scrawled “people first” and “solidarity” on the window in crayons.

“I’ve got 12 grandchildren, and I’m afraid for the world we left them,” said Felicity Whittaker, 80, as she headed toward the bank. She said she’d been attending demonstrations “all my life.”

The Metropolitan Police, which has 31,000 officers, is being supported by officers from the City of London force, the British Transport Police and forces from the surrounding counties of Essex, Sussex, Kent and Bedfordshire.

Three financial-sector workers wearing casual clothes as they traveled to work said they had been told to “dress down” for the day to avoid the attention of protesters. They declined to give their names.

Pinstripe Suit

Tom Allen, 42, from New York, who arrived at his London office in a J. Press pinstripe suit and red tie, said he would be doing business as usual so had dressed as usual. Allen said he had been asked not to say where he works.

“I didn’t give it a tremendous amount of thought,” he said. “I wear a suit every day and I’m not going to live in fear.”

Several hundred activists set up a “climate camp” outside the European Climate Exchange in Bishopsgate, shutting the road, to protest against the market in carbon emissions.

Lucy Wills, a marketing consultant who painted her skin blue and wore a green wig, said she’s concerned about rising sea levels and that carbon trading isn’t working.

“It allows people to emit carbon without guilt,” she said, adding that she intends to join the climate camp. “It’s like a credit card for carbon emissions -- buy now, pay later.”

Police ringed the exchange’s office and set up barriers, though the campers were allowed to block the street.

“We are all at the office,” said exchange Chief Executive Officer Patrick Birley by phone. “Life still goes on.” Employees dressed down so as to not to stand out against the protesters. “We all look extremely scruffy today.”

The encampment was still in place in the evening, and police said they would ask organizers to move it off the road.

To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net; Brian Lysaght in London at blysaght@bloomberg.net.

Last Updated: April 1, 2009 14:43 EDT