Royal Bank of Scotland struck a landmark deal yesterday that will see the government inject up to £25.5bn into the troubled bank and insure £325bn of its assets.

The deal – which came as RBS reported the biggest annual loss in UK corporate history – could be the first of a series by Britain’s big banks that could massively increase the exposure of taxpayers to potential losses on loans and credit assets.

It leaves RBS facing near-total state ownership, lifting the government’s economic interest in the ailing bank to as much as 95%.

Financial Times