The RBS announcement follows similar moves from Lloyds Banking Group announced earlier in the week, and will allow bond holding investors to exchange their investments for cash or higher rated bonds.

A spokeswoman for RBS told the Scotsman, “We aren’t aware what investor appetite will be. It is an offer to exchange so until such time as the offer closes we don’t know what the impact will be.”

Both RBS and Lloyds Banking Group have now received significant amounts of taxpayer money as they struggled to weather the credit crunch.

In addition to other capital raising initiatives, both RBS and Lloyds Banking Group have taken part in the Government’s Asset Protection Scheme, which has, in turn, increased the Government shareholding in both banks.

Gary Jenkins, a credit strategist at Evolution Securities told the Scotsman: “If you are a bank in this situation you want to do everything you can to make investors and depositors certain about your future viability.”

He added: “Clearly RBS is majority-owned by the Government so no-one is questioning that, but at the same time people want to see if it can stand on its own two feet at some stage and the quicker it can do that the better for everyone.”

© Fair Investment Company Ltd