NINE years after Royal Bank of Scotland got a £45 billion Government bailout, the taxpayers who own the bank got a reminder of the scale of the challenge it faces in dealing with the legacy of past problems.

The Bank of England said RBS had emerged as one of the UK’s weakest banks in its latest stress tests based on the lender’s capital position at the end of 2016.

Following a big improvement in that position in recent months, Threadneedle Street gave the bank a pass in its latest stress test. That means officials are confident RBS could withstand the kind of financial crisis that brought the bank to its knees under Fred Goodwin in 2008.

But chief financial officer Ewen Stevenson said the bank will have to deal with “major legacy conduct issues” and finish offloading a huge portfolio of non-core assets before its stress test results meet long term targets.

With RBS dealing with litigation, investigations and reviews covering a range of matters the process of resolving legacy issues may take some time, even if the bank manages to sell off the remaining non-core assets relatively fast.

Directors must ready the bank to deal with the consequences of Brexit at a time when the outlook for the economy is already uncertain.

The Bank of England noted yesterday that big lenders could face serious competitive threats as advances in technology change the financial services sector landscape.

However, the government wants to start selling its 71 per cent holding in RBS shares within 16 months.