15 months of gloom ahead, says RBS chief

He declared that with its £12 billion rights issue secured, RBS would take a cautious approach to business going into the second half of the year.

Chief executive Goodwin, who came under severe pressure from critics during the rights issue, said: "Whilst we remain very much open for business, our risk appetite is tempered by a cautious stance in relation to short-term economic factors and market conditions."

He added: "The use of the phrase short-term wasn't accidental. But whether that means 12 months or 15 months is impossible to say.

"We are seeing an adjustment going on, particularly in the housing market. It is certainly difficult to see that lasting less than 12 months. Clearly, there is more bad news out there than good news at the moment. Indeed, it is almost exclusively bad news. But, generally speaking, for us May was not a bad month."

Britain's second-biggest bank said it remained on course to meet the performance it outlined in April ahead of the rights issue, with analysts now forecasting pre-tax profits of £9.6 billion this year against £9.9 billion last year.

It also cheered the market by saying it was not increasing the amount it expects to write down on toxic loans and investments.

But it added that while the operating performance of many of RBS's businesses remains good, "results have been held back by the effects of the continuing deterioration in credit markets".

Goodwin said there were signs of some recovery in capital markets where RBS is integrating last year's £56 billion takeover of Dutch bank ABN Amro. He said: "There are some chinks of light as some of the areas that were going badly are now coming back slightly."

RBS revealed on Monday that investors had taken up 95.1% of their entitlement to new shares in the rights issue.