RBS 'deliberately' doubled losses to £2bn in 'Alice in Wonderland' accounting Mr Hester's comments came as investor consultancy group, PIRC, said the current accounting standards for British banks had obscured "the true financial position" of RBS. PIRC claims the toxic assets of RBS are still overvalued by at least £10bn because of deficiencies in the IFRS accounting rules the bank uses. Alan MacDougall, managing director of PIRC, said there were "severe deficiencies" in the accounts of Britain's major banks. If you know you are going to make a loss, you have an overvalued asset. The problem was that in 2007 RBS was not valuing its assets properly. It was using IFRS and waiting for the losses to happen," he said. As we know they not merely overwhelmed the bank, they have overwhelmed the public finances. The issue of RBS's accounting adds to the controversy the banks faces after saying it would pay out £785m in staff bonuses, including £390m to employees in its investment banking arm. Mr Hester and Sir Philip Hampton, the bank's chairman, defended RBS's decision to continue paying bonuses despite the lender making its fourth-consecutive annual loss. On average, staff in the investment banking division will received bonuses worth £22,941, compared with £50,114 the year before. Despite the fall in bonuses, the total average pay, which includes bonuses, at the investment banking unit was £112,000, down 26pc year-on-year. George Osborne, the Chancellor, said the figures showed the Government had succeeded in making the bank the "backmarker in the industry when it comes to pay." "Our main interest should be to get back as much money as possible for taxpayers and we must not let those that want to create an anti-business culture put that at risk," said Mr Osborne, in a statement on Thursday. RBS shares rose 5pc to 28.72p.