The FT and Telegraph report the Chancellor sought clearance for the split of the 83%-taxpayer owned bank in July, meaning the government avoided newly-introduced rules on state support for banks.

The Telegraph said the early notification to Brussels, which also came before stricter new rules on executive pay and share ownership came into force, wold make it easier to split RBS into a ‘good’ and ‘bad’ bank if the Treasury wanted to.

A Treasury spokesman said the government would not provide a “running commentary” of discussions with the EU.