Royal Bank of Scotland Group, which is 70%-owned by taxpayers, has reported a pre-tax loss of £2.2bn for the three months to the end of September. The loss compares with a profit of £1.9bn in the same period last year for the bank, which has written off another £3.3bn in bad debts and other bad investments, down from the £4.7bn it wrote off in the previous three months.

RBS, which released a statement saying that although conditions had improved in the past three months they "remain fragile", predicted that the number of companies failing, and the number of people out of work, would not peak until next year. The bank's chief executive, Stephen Hester, told the BBC that the bank's recovery "would be a marathon not a sprint" and that he expected losses until well into next year.

On the thorny subject of bonuses, Mr Hester insisted that everyone at the bank was treading a "very delicate tightrope". He said the bank was leading the way on pay within the government constraints, but he added it was necessary that RBS kept the best people in order to return the bank to profitability.