Disgraced RBS boss Fred Goodwin receiving pension of £600,000 a year

Mr Goodwin - known as “Fred the Shred” for his ruthless cost-cutting - was forced to resign as part of the conditions for the UK Government bailing out the Edinburgh-based bank at the height of the financial crisis.

He originally left with a pension of around £700,000, but following public outrage, it was cut to £342,500 a year.

However, the payments were linked to the rate of inflation and The Guardian today reported that wealth manager Quilter estimates the bank is now spending about £598,000 a year on his pension.

Mr Goodwin presided over RBS as it grew to become the biggest bank in the world, expanding into 50 different countries and growing its assets to a massive £2.2 trillion -twice the size of the UK economy.

In October 2007, RBS led a consortium to take over struggling Dutch bank ABN Amro in a record-breaking £49 billion, but it was later branded one of the worst corporate deals in history, which left RBS vulnerable.

In August 2008 the bank reported its first loss in 40 years. And as the economic crisis gathered pace, RBS admitted to chancellor Alistair Darling that it was going to run out of money within hours.

A government bailout worth £45 billion saved the bank from collapse. But Mr Goodwin was criticised over lavish spending, including private jets. And he was later stripped of the knighthood he had been awarded for services to banking.

The government is said to be preparing to sell its final stake in RBS, which was once as high as 80 per cent, but its is expected to do so at a £10 billion loss to the taxpayer.