ROYAL Bank of Scotland has cut itself free from an £8 billion capital tie to the UK Treasury, it has announced, in the wake of recent moves to strengthen its capital base.

The ending of the so-called ­Contingent Capital Facility marks another step along the road to getting RBS in shape for the UK ­Government eventually to start selling off its stake in the bank.

Under the scheme, the Government would have bought up to £8bn "B" shares in RBS if the bank ran low on available funds.

It acquired an 82% stake, after ­pumping £46bn into the Edinburgh-based bank during the 2008 financial crisis. This was the world's biggest ever bank bail-out.

A spokesman for the bank said: "It is further evidence of the progress we have made in making RBS safer and stronger with dramatically improved liquidity and ­capital positions."

The Exchequer has already begun selling the tax­payers' stake in Lloyds back to the private sector. However, it is expected to be well after the 2015 General Election before the majority stake in RBS will be returned to private hands.

Its cancellation means RBS will be spared from paying the Treasury the further £320 million fee that would have been owed had it remained in operation.

In November, the bank had said it would create an internal "bad bank" to fence off its riskiest assets, part of a raft of measures designed to heal its ­relationship with the ­Coalition and speed up its privatisation.