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

The bank's expansion strategy was led by Sir Fred. 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.”

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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People have a right to be angry, but the Government has to get these banks lending again

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While the Government will increase its stake in RBS, Lloyds TSB, which from today will be known as the Lloyds Banking Group after officially taking over HBOS, is reportedly fighting against increase state-ownership.

As part of last year's first attempt at stabilising the UK banking sector, Lloyds TSB and HBOS, owner of Halifax and Bank of Scotland, took £17 billion in funding from the Government in exchange for a 43 per cent state in the combined bank.

Mr Darling said: “I have said that in the longer term, I don’t believe that governments ought to be running banks. Provided that they are properly supervised and regulated, provided their boards take proper decisions on who they lend to and they lend responsibly.”

Mr Brown and Mr Darling appeared at a joint press conference in order to deflect criticism over introducing a second bailout of the banking sector just three months after a first attempt.

The Prime Minister denied that the Government was writing a “blank cheque” for the banks, and there would be “legally binding” commitments in return for state support.

Banks will be encouraged to lend again under new measures announced by the Government.

The latest deal with the banks will require the taxpayer to pour billions of pounds into the troubled companies in the form of guarantees for new lending and the purchase of a range of loans and other assets now on their books, in addition to the £37 billion funding pledged in October.

The actual eventual cost is at this stage impossible to quantify, but some experts have warned that the resulting huge rise in Government borrowings could put intolerable pressure on the public finances.

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