Sir Fred Goodwin, the outgoing chief executive of Royal Bank of Scotland, made a personal loss on paper of £162,000 yesterday after subscribing for his full entitlement of shares in the bank's disastrous £15billion rights issue.

As expected, the Government was left with almost all the new shares, giving it a stake of 58 per cent in the enlarged bank, after existing shareholders shunned the emergency capital-raising. Only 0.24 per cent of the new shares were taken up, some of them by RBS directors who had promised to take up their rights in full before it became apparent that the deal was a flop.

Sir Fred bought 1.59 million shares at the rights price of 65p per share. These were showing a significant loss after the market price closed at 55.3p. Most of the other directors were also nursing losses.

The loss on the Government's holding of 22.8 billion shares was £2.3billion. Every penny change in the RBS share price alters the value of the holding by £228 million.

Stephen Hester, the new 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.”

As part of the £20billion rescue of RBS seven weeks ago, the Government agreed to underwrite the entire £15billion rights issue, as well inject £5billion of preference share capital.

RBS said that most of the £265million cost of the rights issue involved underwriting fees paid to the Government. UBS, Merrill Lynch, RBS's in-house unit Hoare Govett and Linklaters were the main advisers.

Sir Fred, who is still helping to hand over the reins to Mr Hester, is seen as the architect of RBS's golden years in the wake of the NatWest takeover and also of more aggressive expansion that led to its collapse. He was paid £4.19million last year and has waived any payoff.

The controlling stake in RBS will be held by UK Financial Investments, an arm's length body created to hold all the Government's holdings in rescued banks.

John Crompton, head of equity capital-raising at Merrill Lynch, was named as UKFI's first executive director on Thursday. Merrill advised on the capital-raising and also on many past RBS transactions, including its ill-fated decision last year to make a consortium bid for ABN Amro, the Dutch bank.

Mr Hester, who is being paid £1.2million plus 10.4million RBS shares as the price of wooing him away from British Land, said that he was grateful to the Government for its support. “We must put the past behind us and move forward with a clear focus on what we need to do next,” he said. “We will focus on rebuilding RBS on its powerful customer franchises globally and, in time, deliver the economic returns that all our shareholders expect and deserve.”

One priority will be the shrinking of RBS's huge investment banking unit, where 3,000 job losses are already planned. There is also a question mark over the bank's huge programme of sports sponsorship. It sponsors Formula One motor racing and the Six Nations rugby competion. There are doubts whether RBS would be able to justify continuing sponsoring individual sports stars when it is dependent on taxpayers' money. An RBS spokesman said that all sponsorship was under review but dismissed speculation that the sponsorship of the Williams F1 team might be withdrawn.

Brian Lenihan, the Irish Finance Minister, met the Republic's four banks and two building societies covered by the state guarantee scheme last night over plans to recapitalise and consolidate the banking sector. At least ten Irish and foreign investment firms interested in co-investing with the Government in a bank recapitalisation stepped up its plans with the appointment of Deutsche Bank as adviser yesterday.

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