Royal Bank of Scotland has reported a loss before tax of £ 1.3 billion during the third quarter mainly because of an extra £400m provision for mis-selling payment protection insurance (PPI).

The bank had recorded a pre-tax profit of £ 2 billion during the same quarter of the previous year. The bank's total spending for PPI to £ 1.7 billion. Chief executive Stephen Hester said that the bank is aiming to recover its position even as it faces huge losses and consequences of its involvement in the Libor-rigging scandal.

Hester said, "Our funding and capital position has been transformed, we have repaid all emergency loans from the government and central banks, and we have recently exited the Asset Protection Scheme without ever making a claim."

He also said that the bank is facing a difficult market situation as economic pressures force customers to restrict activity. RBS provides resources for customers and for our clean-up, whilst signposting shareholder value in future.

The bank also said that the non-core assets has fallen to £ 65 billion in the quarter while its bad-debt losses dropped £159 million in the quarter to £1.2bn from the earlier quarter.