Cable said it is “unrealistic” the bank could once again be privately owned by 2018, adding the bank is likely to be broken up before it is re-privatised.

Speaking to the Sunday Telegraph Cable said: “I don’t think it would be sensible for the government to set a rigid timetable, but given where we start from I think it is pretty unrealistic to think of RBS going back into private ownership this Parliament or probably within five years.”

He hinted the government may yet opt to split the bank in two, into a good and bad bank, in selling off a number of the lender’s toxic assets.

“I think there is a very strong argument for saying that the bank got too big and indeed that was the source of its undoing,” he added.

“But we are having to balance the benefits of breaking up the bank and the potential benefits for competition with the significant costs, particularly in terms of disrupting IT systems.”

Chancellor George Osborne is also understood to favour splitting the bank into two, stating in June at the annual Mansion House speech:

“With hindsight, I think splitting RBS into a good bank and a bad bank was probably what should have happened in 2008,” he said.

Earlier this month RBS promoted its head of retail Ross McEwan to the role of chief executive, replacing ousted Stephen Hester.