In a statement the bank said it ‘has now completed a comprehensive process, overseen by the Audit Committee, which carefully evaluated the offering of each proposing firm, which resulted in a recommendation which has now been endorsed by the RBS Board.’

The bank first indicated that it would put its audit out to tender in the 2013 annual report. At the time, RBS stated that it was putting the external audit out to tender for 2016.

EY will take over with effect from the financial year ending 31 December 2016.

Deloitte, who has been auditor since 2000, will continue in the role and will undertake the audit for the year ended 31 December 2014, having been appointed at the 2014 AGM.

In its statement the bank said: ‘Subject to shareholders’ approval of their reappointment at the 2015 Annual General Meeting. Deloitte will also undertake the audit for the year ending 31 December 2015 in order to facilitate a smooth transition. Following the finalisation of their terms of engagement, the appointment of EY will be recommended to shareholders for approval at the 2016 annual general meeting.’

Deloitte was paid a total of £29.9m by RBS last year for audit and audit-related assurance services, according to the state-owned bank’s 2013 annual report. 

The firm received a further £3.6m in fees for tax and consulting services, plus £500,000 for auditing the bank’s pension schemes.

RBS was the subject of a £45bn taxpayer bailout after the bank got into difficulties under former CEO Fred Goodwin, who had previously worked for Deloitte.

The switch is the latest in a series of changes of auditor amongst the UK’s biggest banks. HSBC has named PwC as its auditor to replace KPMG which had been in place since 1991. However, KPMG has held on as auditors to Standard Chartered Bank, following a tender process that had been expected to end its 40-year tenure as the bank’s auditor.

Barclays, which is audited by PwC, has indicated it plans to put its audit out to tender in 2016.