The Government will be left with a 58 per cent stake in Royal Bank of Scotland (RBS) after investors snubbed the troubled bank’s £15 billion rights issue.

In a statement this morning, RBS said just 0.24 per cent of the new shares offered to investors last month were taken up, leaving the Government to pick up the slack buying nearly 23 billion shares.

The rights issue was offered at 65.5 per share. RBS shares opened slightly lower this morning and were down 3 per cent at 52.7p at midday, valuing the business at around £9.1 billion.

RBS shares were trading above 380p 12 months ago and were above 280p as recently as September 24.

Stephen Hester, RBS chief executive, said: “We regret that existing shareholders did not take up their pre-emptive rights but understand that market sentiment toward the banking sector made this uneconomic in the short term.”

“We must put the past behind us and move forward with a clear focus on what we need to do next. There remain substantial uncertainties and challenges outside our control but for our part the job is underway.”

The failed capital raising comes just months after an original £12 billion rights issue by the bank before the financial crisis deepened in September. At the time, the £12 billion cash call was the largest rights issue in UK history.

Sir Tom McKillop, RBS chairman, apologised to shareholders last week at the meeting to approve the Government bail-out, saying he was "profoundly sorry" for the human and financial cost borne by investors.

On top of the £15 billion rights issue the Government has also committed to buying £5 billion in RBS preference shares - which impose restrictions such as a ban on dividend payouts - which the bank will buy back in the future.

Two other banks, Lloyds TSB and Halifax Bank of Scotland, will also ask shareholders to buy £13 billion of new shares in offers underwritten by the taxpayer in the coming weeks.

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