“Of the three foreign banks that suffered the ignominy of having their capital plans fall foul of the US Federal Reserve’s stress tests, the failure is likely to be most painful for Royal Bank of Scotland.

“It is almost certain to delay RBS’s plan to file for an initial public offering of Citizens, its US network of 1,400 branches, which it had been expected to do before this summer in order to sell shares in the second half of the year.

“The sale of Citizens is a central pillar of RBS’s plan to rebuild its enfeebled balance sheet. This is essential for the bank, which is still 81 per cent owned by the UK taxpayer after being bailed out by the government in 2008.

“The Edinburgh-based bank’s capital position fell close to regulatory minimums after it suffered heavy losses of more than £8bn last year. At the end of December its core tier one equity ratio, a measure of how much capital it has as a percentage of risk-adjusted assets, fell to 8.6 per cent – well below most big rivals.”

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Read full Financial Times article here.