Ulster Bank lost the equivalent of £732 million (€861 million) of deposits in the four days after the Irish government guaranteed the State's banks in September 2008, a report from Britain's Financial Services Authority revealed today.

The long-awaited report on Royal Bank of Scotland, running to 452 pages, said the group was dragged to the brink of collapse three years ago by poor management decisions and flawed regulation and supervision.

It criticised Britain's former chancellor and prime minister Gordon Brown for encouraging "light touch" regulation, and RBS's weak capital and funding and its decision to buy parts of Dutch bank ABN Amro.

"The decision to make a bid of this scale on the basis of limited due diligence entailed a degree of risk-taking that can reasonably be criticised as a gamble," the report said.

The FSA was critical of its own role, but said it was under political pressure to operate a hands-off regulatory regime. The FSA said flaws in its own supervision "provided insufficient challenge" to RBS and said regulators should in future be given greater powers to block bank takeovers.

The report also noted the effect Ireland's bank guarantee had on Ulster Bank's deposits.

"The Irish government's announcement that it would guarantee the deposits of Irish banks but not banks such as RBS's subsidiary Ulster Bank further intensified pressure on RBS's liquidity position in the period that followed the failure of Lehman Brothers," the report said.

Ulster Bank's assets grew at an average 26 per cent rate in the four years through 2007, to £55 billion, it said. Ulster's cumulative impairment charge for the three years through 2010 equate to 7.5 per cent of its gross loans at the end of 2008, the report said. It was more than double the average 3.1 per cent charge for RBS's total loans over the period.

Under former chief executive Fred Goodwin RBS came within hours of running out of cash in October 2008 and was only saved by a £45 billion taxpayer bailout.

"Taxpayers should never have had to rescue RBS," said RBS chairman Philip Hampton. "As we build the new RBS, we are learning the lessons of the past and working to regain the trust of the public. Our new leadership has made significant progress in making the bank safer and more focused on the needs of its customers."

Additional reporting: agencies