Assets belonging to John Paulson, the US hedge fund manager who has profited more than any of his peers from the beleaguered UK banking sector, are now worth about five times more than the market capitalisation of the Royal Bank of Scotland, after the dramatic loss in the value of its shares brought Paulson over £30m (€32.3m) from a short position he holds in the group.

RBS' shares plummeted by 67% yesterday, closing at 11.16p in London, after the bank had earlier announced it expected to make a group loss of £28bn for 2008. The fall made Paulson £30.7m, despite him recently halving the 0.87% short position he held in mid-September when the UK Financial Services Authority imposed a ban on taking fresh short positions in financial stocks.