There were a total of £5.1 billion in credit market write-downs in the first six months of 2008, plus £1.48 billion of impairment losses, the bank said in a statement. The bank’s Tier 1 capital ratio – a key measure of a bank’s financial strength under international regulations – was 8.6 per cent, RBS said.

It was a brighter picture, however, at RBS’s UK Wealth Management business segment, which saw total income rise by 12 per cent to £425 million, operating profit grew by 14 per cent year-on-year to £210 million.

“Wealth management generates earnings from both private banking and investment services, and this balanced income base enabled the division to maintain strong organic growth,” RBS said.

It said Coutts’ contribution to income rose by 20 per cent, but RBS did not elaborate on other specific Coutts performance measures.

"The results we have published today demonstrate progress in a number of important areas, and it is all the more unsatisfactory, therefore, that they record a loss as a result of our credit market write-downs. We are determined to ensure that the inherent strengths of the Group's diverse business model are not obscured in this way again," said Fred Goodwin, chief executive.

Mr Goodwin and Tom McKillop, RBS chairman, have come under fire for paying an excessive price for Dutch bank ABN Amro last year on the eve of the credit crunch. RBS, along with Spanish bank Santander and Dutch-Belgian banking group Fortis, bought the Dutch bank last year. Both Fortis and RBS have tapped financial markets for additional capital to replenish their capital strength. In the case of RBS, it raised £12.3 billion in new funds.