Gordon Brown today said he was "angry" with the Royal Bank of Scotland over a strategy that has left it with potential losses of £28 billion, as the Prime Minister defended the Government’s second attempt to rescue Britain’s struggling lenders.

Mr Brown said this morning that Britons had a right to be furious at "irresponsible" behaviour which saw RBS spend billions last year acquiring ABN Amro, the Dutch bank which had exposure to US sub-prime mortgages, as well as investing directly in the American home loan market.

“Yes, I’m angry about what happened at the Royal Bank of Scotland," he said.

The bank's expansion strategy was led by the former chief executive, Sir Fred Goodwin, who left last year to be replaced by Stephen Hester, the former chief at British Land.

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Sir Tom McKillop, the chairman at RBS who worked closely with Sir Fred, is being replaced Sir Philip Hampton, the chairman at J Sainsbury, who joins the bank today but will take over the role in April when Sir Tom retires.

Mr Brown added: "Now we know that so much was lost in sub-prime loans in the US and now we know that some of that was related to the purchase of ABN Amro, I think people have a right to be angry that these write-offs are happening and that these write-offs were caused by decisions that were made about international investments that were clearly wrong investments.”

RBS confirmed this morning that it will report a full-year loss in February which could hit £28 billion - with £20 billion of the total related to the acquisition of ABN.

It is the biggest-ever loss in British corporate history and is nearly double to current £15 billion record set by Vodafone, the UK telecoms giant, in 2006.

RBS also confirmed that the Government is set to increase its stake in the bank from 58 per cent to 70 per cent. Last October, the Treasury sank £37 billion into the banking sector – the Government’s first attempt to stabilise the market – with RBS taking £20 billion of funding.

Both Mr Brown and Alistair Darling, the Chancellor, refused to comment on whether RBS will now be nationalised, following the Government's takeover of Northern Rock early last year.

However, the emergence of larger-than-expected losses at RBS, and the prospect of full-state ownership sent shares in the once-mighty bank tumbling by 42.9 per cent to 19.8p - the lowest since 1985.

Commenting on the need for a second bailout of British banks, Mr Darling said: “There is no doubt that because the economic downturn has been much sharper, especially over the last few weeks, that has exacerbated the situation.”

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