TAXPAYERS must no longer be on the hook for bankers' misdeeds, politicians said after Royal Bank of Scotland posted losses of £1.5 billion.

The Edinburgh-based bank admitted it had set aside hundreds of millions of pounds to deal with the fallout from a series of mis-selling scandals as well as June's catastrophic computer failures.

RBS boss, Stephen Hester, agreed that the industry's reputation had hit "new lows" in recent weeks but attempted to head off growing calls for full nationalisation of his bank, insisting that it was best run as a commercial company.

But yesterday MP Stewart Hosie called for assurances from the institution, still mainly taxpayer-owned, that lessons have been learned and scandals would not be repeated.

RBS was bailed out to the tune of £45 billion at the height of the financial crisis in 2008.

At the time it was hoped that the Government might make the money back relatively quickly, but continuing problems at RBS and in the world markets mean that taxpayers still own more than 80% of the bank's shares, with no prospect of being repaid soon.

At the same time there is growing anger over a perceived reluctance in the banking sector to lend to small businesses, which has led to calls for full nationalisation of RBS.

RBS yesterday confirmed that part of its losses, double those posted last year, were related to a series of scandals which have swept the industry.

The bank confirmed it has dismissed staff over Libor inter-bank rate rigging, for which it is still being investigated.

RBS also said it had put £260 million aside to compensate those mis-sold Payment Protection Insurance (PPI) and another £50m for those mis-sold interest-rate swaps.

Another £125m has been set aside to cover costs relating to June's systems breakdown, which saw millions of customers unable to access accounts.

On the company's preferred measure, it made an underlying operating profit of £1.8bn, down from nearly £2bn for the same period in 2011.

Mr Hosie, the SNP's Treasury spokesman, said: "Times remain tough for RBS, and there are obvious challenges ahead – as there are indeed for the whole of the sector.

"We need to have confidence now that, on IT investment or the mis-selling of financial products, lessons have been learned and that these scandals will not be repeated. We have got to clear up the mess and move on."

Louis Brooke, spokesman for anti-bank campaign Move Your Money UK, said: "RBS results show just how fundamentally flawed our current banking model is."

But Mr Hester insisted his plans were on track.

"We thought there would be a five-year period it would take us to be a normal bank again. I think we are on track for that," he insisted.

He added that running RBS as a commercial company was the best answer. "I am not sure why the state would want to directly take control of – and exposure to – the remaining toxic assets and problems of RBS," he said.

Full nationalisation would cost an estimated £5bn but would allow the Government to instruct the bank on how to manage its loans without fear of objections from other investors.

RBS's lending to small businesses for the first six months of 2012 rose only slightly on the previous year but the bank said loan applications from small companies were down 18% on the same period.

Mr Hester said the Government could set up a sector-wide scheme for all banks to offer loans to smaller companies.

"There is a cheaper way than buying all of RBS if you want these loans to be made," he said.