Jobs at risk as RBS reports profit

The bank flagged up further staff culls ahead, despite the loss of 2,600 jobs in insurance and retail banking earlier this year, bringing the total redundancy count to 22,600.

Chief executive Stephen Hester, who was parachuted in to rescue the bank in the middle of the banking crisis, said a quarter of the job cuts have been compulsory.

"We are under continuing intense pressure to cut costs," he said. "There are still some job losses yet to come until we complete the restructuring."

Of the 2,600 job losses announced in May, 2,000 were at the bank's insurance arm, which employs nearly 4,000 people in Yorkshire.

The RBS insurance business includes Direct Line, Green Flag, Churchill and Privilege. Employees in the region are based primarily at Pudsey, near Leeds, but also at Doncaster, Normanton, Barnsley and in Leeds itself.

RBS, which is 83 per cent owned by the taxpayer, plans to sell its insurance businesses in 2012 after the European Commission ordered it to do so to soothe competition concerns following its state bail-out.

RBS announced a modest 9m net profit in the six months to June 30, against a loss of 1.04bn a year earlier.

The group moved from a 248m loss in the first three months of the year to a 257m profit in the three months to the end of June.

Earlier this week RBS announced the sale of 318 branches to Santander for 1.65bn and yesterday it confirmed the 2bn sale of an 80 per cent stake in its WorldPay payment processing company.

It is not clear when the Government's stake will be sold.

Mr Hester said the timing of sales was a matter for the Government. "We are trying as hard as we can to put them in a position where they can profitably sell," he said.

RBS's retail banking arm boosted operating profits to 416m during the first half, helped by wider margins on lending.

Bad-debt losses fell to 687m from 824m in the first half of last year.

The bank remains on course to meet its 8bn mortgage lending target for the year to February 2011, although RBS saw signs of weakness in the second quarter with a 21 per cent fall in application volumes.

The group said it lent a gross 12.7bn to businesses between April and June, 27 per cent up on last year.

The investment banking arm had a "more difficult" quarter following the sovereign debt crisis which struck markets in April.

RBS had to be rescued by the Government in October 2008 after its finances were stretched by its role in the acquisition of Dutch bank ABN AMRO in 2007.

Regulator probes queen's bank after fund sales concerns

The financial services regulator has launched a probe into the Queen's bank over fund sales.

Royal Bank of Scotland's private banking arm Coutts, which counts the Queen among its clients, is being investigated by the Financial Services Authority.

The investigation concerns the sale by Coutts of a savings product offered by US insurer AIG, which was forced to suspend fund withdrawals in 2008 when it hit financial trouble during the credit crisis.

RBS said it was "co-operating fully" with the probe.

The private banking industry has struggled to rebuild its reputation after falling out of favour with well-heeled clients who lost money on investments that went bad in the financial crisis.

Coutts has also been under fire from entrepreneur Sir Keith Mills, who has mounted a high profile publicity campaign, including placing billboard advertisements criticising the private bank near its headquarters in London.