Credit where it's due: Another staging post on RBS's road to recovery

As investments go, the taxpayer’s 80 per cent stake in Royal Bank of Scotland (RBS), owner of NatWest and the soon-to-be resurrected Williams and Glyn, has been disappointing.

Whereas the Chancellor of the Exchequer has been able to offload tranches of Lloyds TSB/HBOS – including a successful flotation of a reborn TSB – RBS is a long way from being fixed. For example, the share price needs to rise to the £5 mark before the taxpayer breaks even; last night the shares closed a little above £4, a tad up on the day. To offer some perspective, before the banking crash forced its state rescue, RBS’s shares were worth £68 each.

In any case, the announcements from the bank yesterday represent a further modest staging post on the slow road to recovery. The investment bank is to be further scaled back – highly appropriately for an institution owned by the British people, who have suffered enough from the casino end of the financial services industry. The bank is paying off its debts – financial and moral – and rebuilding its UK loan book. RBS is due to divest some English branches under the Williams and Glyn brand, and will need to deal swiftly with accusations about tax-avoidance schemes at Coutts.

The pretensions and ambitions of the old NatWest, bought by RBS almost a quarter of a century ago, and RBS itself in the Fred Goodwin era, are now firmly in the past. RBS/NatWest no longer aspires to mix it with the Wall Street giants of investment banking or to become the biggest bank in the world, with a substantial presence from Brazil to Hong Kong.

As a safer, more risk-averse institution, RBS will eventually emerge from its state stewardship transformed. Given its track record, that is just as well.