On your behalf, that stake represents a loss of £27 billion, thus far. Meanwhile, according to Stephen Hester, the executive brought in to rescue the debauched institution, its once-proud investment banking arm would struggle to find a buyer.

If the limb is diseased, cut it off: that sounds like common sense. But ask yourself, first, how the affliction was acquired. The virus that swept through RBS and the banking industry was not an act of God. Another bout would prove fatal.

RBS is a special case, even a historic case. Its £12bn rights issue in April of 2008 was "the largest in UK corporate history". This was followed by a £24.1bn loss: "The largest in UK corporate history." The ensuing £45 bn state bail-out was – but you guessed – the biggest in the history of corporate rescues.

History will also record that just weeks before the rights issue Sir Fred Goodwin was still claiming he had "no plans for inorganic capital raisings or anything of the sort". When reality decided otherwise, the bank wrote down £4.3bn. The bulk of this was explained as £1.75bn due to "monoline insurers", £1.25bn due to "leveraged loans", and £990 million thanks to "asset-backed securities". Sub-prime rubbish, in other words.

From being fully funded – backing its investments with deposits – half a dozen years before, RBS had the thinnest of capital ratios (no money), vast and expanding losses on "collateralised debt obligations" (sub-prime rubbish) and an absolute reliance on external funding (credit) that had ceased to exist.

Sir Fred's role in the £57bn capture of the Dutch bank ABN Amro in 2007 is well documented. Less well known is the fact that even before the deal was sealed RBS was having more difficulty raising funding than the bank it had captured. Its activities in "global banking and markets" were eating the institution alive. Yet even at this point there were "no plans", supposedly, for a cash call.

The Financial Services Authority (FSA) report into RBS has put that, and almost everything else, down to human error. George Osborne, the Chancellor, has decided, however, that the monster will not rise again. George is flaying the dragon. RBS is to withdraw, in effect, from the global game while the entire British industry is reformed.

You would be entitled to observe that it's about time. The FSA certainly took long enough pondering RBS before deciding that "poor decisions" – you think? – laid low the world's 10th biggest company. The authority noted last month that it did not keep an eye on things, that "excessive risk-taking" is risky, and that reform would be a good idea.

The Government agrees, but it, too, is in no rush. Mr Osborne's demand that RBS should quit the casino merely confirms plans Stephen Hester has put in train. The Chancellor's wider intentions for banking reform are meanwhile curious: he means to do something like the right thing, but he intends to wait five years (lean or fat) before doing so.

How else to interpret his response to the report by Sir John Vickers into banks? Mr Osborne accepts that distance needs to be put between investment banking and retail banking, but only by dint of "ring-fencing". What does that mean? An absolute separation between a utility on which society depends and the blind poker that has proved catastrophic? In fact, we are not yet sure what a ring fence would look like.

Mr Osborne can't force other banks to follow state-owned RBS. As a matter of fact, he can't actually force RBS to quit investment banking. No bank will be obliged to amputate its investment arm, just make the limb "legally separate". All banks will have to improve their capital ratios, however, to avoid Sir Fred's fate. This should see them better protected against a crisis, and it makes a lot of sense.

It would make more sense if Mr Osborne regarded the issue as a priority. Instead, the Government will publish a White Paper next year, legislate in 2015, and expect the banks to be up to scratch by 2017. Why has the Chancellor adopted this timescale? That might count as another small mystery.

The Coalition could be at an end by 2017, for one thing, and its partners out of office. Mr Osborne has aimed for the long grass of Westminster cliché. Five years' grace also allows the banks, lobbyists par excellence, plenty of time in which to chip away at the Vickers proposals. The campaign has already begun.

You thought they had seen sense? You thought they knew they were getting off lightly? Bankers count money, not blessings.

Their industry still clings to the fiction that work essential to society (the retail function) is inseparable from the parts liable to generate quick profits and big bonuses (the investment game). We know, from bitter experience, that the proposition is false. Yet here we have Mr Osborne granting the lobbyists licence.

Angela Knight, the former Tory MP who acts as chief executive for the British Bankers' Association, is already on the case. Sir John reckoned that reform would cost banks a maximum of £7bn. Mr Osborne has agreed to call it £8bn, tops. Ms Knight's members insist the figure will be £12bn. She adds that if "the ring fence is in the wrong place ... it is the customer who feels it and the customer who will bear the consequences".

The Chancellor reckons that the benefits outweigh the costs if future bail-outs are avoided. But Britain's banks, in whatever form, will still remain "too big to fail" no matter what: Mr Osborne has not addressed that issue.

He has overlooked something else. Even if the banks' investment operations become separate entities forbidden to gamble with depositors' funds, that doesn't mean the gambling will stop. The arcane financial "instruments" that helped to bring down RBS are as popular as ever, and the City of London is still at the heart of the trade.

The point of reform was not simply to spare the taxpayer the costs of another bail-out. The idea was to put a stop to recklessness. Even investment bankers don't play with fantasy money. They can play on happily, though, for another five years.