Alistair Darling is under pressure to prove Britain is serious about cleaning up the toxic bank balance sheets, after missing the summer deadline for signing insurance deals with RBS and Lloyds worth £585bn.

The chancellor has told officials to accelerate work on finalising the deals, fearing that delays could undermine Britain’s ability to lecture other countries at September’s G20 summit in Pittsburgh on the need for urgent action to clean up their banks.

Gordon Brown’s team is growing irritated that RBS and Lloyds have still not signed legal deals under the government’s flagship asset protection scheme, in spite of agreeing their participation in principle in March.

The Treasury had intended to finalise legal agreements before the summer break, with RBS expected to insure £325bn and Lloyds £260bn of impaired assets; the insurance premium is being paid in shares.

Financial Times