It may be HM Treasury that is underwriting Royal Bank of Scotland’s latest fundraising rather than a clutch of investment banks but that state guarantee appears to have done little to enhance its popularity.

Shares in what was at one stage the world’s sixth-biggest bank fell by nearly a third at their worst as the stockmarket digested the details of the Government’s £20 billion cash injection.

That may have something to do with the massive dilution involved: having issued 6 billion new shares as part of its £12 billion rights issue only four months ago, RBS is now selling 23 billion more.

It may be the unwillingness of City institutions to serve as minority shareholders in what will effectively become a state enterprise, a lack of faith that RBS’s newly-cancelled dividend will be restored anytime soon, and fright at the 12 per cent coupon that the bank will pay the Treasury on its £5 billion of preference shares.

Or it may simply be that RBS’s emergency fundraising was also accompanied by a profit warning and the caution of further impairment charges to come.

Whatever the explanation, the destruction of shareholder value overseen by Sir Fred Goodwin and his team since they joined the pursuit of ABN Amro early last year is nearly complete. Nor can there be any certainty it is now over. In a previous incarnation, Stephen Hester, Sir Fred’s replacement, was brought in to Abbey National to clean up a toxic balance sheet. With RBS now performing a wholesale change of strategy, the scale of the writedowns should be substantial.

At 65.5p, existing shareholders are able to participate in the fundraising alongside the Treasury. Given that, as taxpayers, they will already have a stake in RBS’s recovery, they might be forgiven for declining its offer.

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