Sir Fred Goodwin, chief executive of Royal Bank of Scotland, said he was “numbed” and “chastened” as he announced losses of £692m ($1.3bn) for the first half of 2008.

Amid a tightening credit crunch, profits made by the UK’s five largest banks slumped by 60 per cent to £8.6bn in the first six months of 2008 after they took £11.6bn of impairment charges mostly linked to complex debt securities rooted in US subprime assets.