Taxpayer-owned Royal Bank of Scotland has reported a £2.04bn loss for the first half of the year after taking into account £1.3bn worth of legal costs.

The lender put aside £450m to cover payment protection insurance claims after the Financial Conduct Authority extended the deadline to 2019 earlier this week.

RBS was also stung by £630m in restructuring costs and a similar figure for litigation brought by shareholders linked to its bailout.

The bank said it has abandoned plans to separate the Williams and Glyn branch network because of the complexities and costs associated with the proposal.

But chief executive Ross McEwan said RBS is "well positioned" for a potential economic slowdown.

He said: "We are clearly in phase two of our strategy, where our focus is on drawing a line under many of the legacy issues that have plagued this bank, and transforming the core business so we can deliver consistent, sustainable profits and results for our shareholders and do great things for our customers."