On the Today programme Terry Smith cast doubt on Royal Bank of Scotland's smaller than expected provisions for bad debts and credit losses. The point about banks, the Collins Stewart chairman said, was that they provisioned not for what was needed, but for what they could afford. The implication was that until RBS clinches a few more asset sales to bolster its balance sheet, it was in too fragile a position to come fully clean about the toxicity of its assets. That is even after getting into shareholders' ribs for £12 billion in fresh equity.

It is sad that, 20 years after Mr Smith exposed the dodgier book-keeping practices of the City in his seminal Accounting for Growth (and was dismissed by UBS for his troubles), we seem no nearer being able to rely on the numbers in published accounts. It does not help that under fair value accounting rules, companies can book as profits declines in the market value of their own debts. That wheeze helped to reduce RBS's published half-year deficit by £812 million, enabling it to duck the charge of being responsible for Britain's worst banking loss.

Under these Alice in Wonderland rules, all RBS needs is a disaster that leads to a rating downgrade to “junk” status and the ensuing collapse in its debt price would have it back in profit in no time.

Sir Fred Goodwin, the newly contrite chief executive, is already making good progress in integrating the ABN Amro assets. Re-establishing his personal credibility, and that of his numbers, is going to take a little longer.

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