Royal Bank of Scotland has suffered the biggest loss in British corporate history – more than £24bn – and admitted today the taxpayer could end up owning 95% of the bank if its losses continue to mount.

The troubled bank needs to sell up to £19.5bn new B shares to the taxpayer in order to insure £300bn of its most troublesome assets. As a result, the taxpayer's voting rights over the bank would increase to 75% from almost 70% now. But Stephen Hester, the new chief executive, said the government's "economic interest" could rise to 95% "depending on how things work out".

On a conference call with reporters this morning, Hester said he "wanted to be honest and clear" on the government's stake because "we live in an uncertain world". But the voting influence of the taxpayer would be restricted to 75%, he said.

The scale of the losses suffered by the bank exacerbated the row about a pension worth nearly £700,000 a year being drawn by former chief executive Sir Fred Goodwin, who is 50 and left last month after almost a decade at the helm.

Chancellor Alistair Darling said this morning that the government had asked Goodwin to waive the pension, which threatens to undermine government claims that it would not reward failure.

Hester said today the payments were part of the contractual entitlement to Goodwin and were agreed by the government at the time of the initial October bail-out.

The figures from RBS showed a statutory loss of £40bn, which falls to £24.1bn if technical issues relating to the bank's acquisition of ABN Amro are ignored. It largely comprises £7.8bn of trading losses and £16.8bn of writedowns caused by paying too much for acquisitions, notably ABN.

The City had been braced for £20bn of writedowns so the overall loss is slightly lower than expected.

But Derek Simpson, joint leader of Unite, said: "These historic and humiliating losses bring into sharp focus just how recklessly RBS's former management team have behaved.

"The whole country is paying the price through job cuts and repossessions on a massive scale. It is time to take control and fully nationalise this bank.

"You cannot have a state bail-out on one hand while allowing the spectre of thousands of job losses to loom over staff on the other," he said.

Hester today set out the detail of the radical restructuring he intends to undertake to try to set RBS back on a course to recovery. He outlined seven goals, which involve the bank shrinking by 20%, and did not dispute speculation that up to 20,000 jobs from a 177,000 workforce could be axed. The goals were to:

• Shift £240bn of assets to a non-core division for disposal/run down over three to five years;

• Deliver substantive change in all core division businesses;

• Centre on the UK with smaller, more focused global operations;

• Radically restructure global banking and markets operations, taking out 45% of capital employed;

• Cut more than £2.5bn from the group's cost base;

• Have access to the government asset protection scheme;

• Push forward major changes to management, processes and culture.

Hester said: "Our aspiration is that RBS should again become one of the world's premier financial institutions, anchored in the UK but serving individual and institutional customers here and globally, and doing it well."

The bank's offices in 36 of the 54 countries in which it operates around the world will be cut back or sold. But major "global hubs" will remain.

New chairman Sir Philip Hampton made a fresh apology to shareholders. Last year their shares were trading at 400p. In early trading today they were 28.1p.

Hampton said: "An inevitable but regrettable consequence of the successive capital-raising exercises has been the dilution of the interests of existing shareholders. My predecessor, Sir Tom McKillop, apologised to shareholders for the impact on them of the erosion of their investments, a sentiment I echo. Those of us now charged with leading the group are committed to implementing measures which will allow us to restore the group to standalone financial health in the interests of all shareholders."

The bank also took a £7bn charge to cover impairment of loans that have turned sour.

Executives had spent much of the night locked in talks about the Asset Protection Scheme to insure £300bn of its most troublesome assets. In turn the bank will issue £13bn of the new class of B shares and a further £6.5bn at a later date to pay for the scheme, which forces the taxpayer to take on additional risk. In return, RBS will lend an extra £25bn this year and a further £25bn next year to try to kick start the economy. The fee will be spread over seven years in the bank's accounts.

Bank of England governor Mervyn King told MPs today that it was "impossible to tell" how much capital the banking sector actually needs. "In large part it will reflect developments in the world and our own economy that are impossible to predict with any precision," King told the Treasury select committee.

Hester confirmed Nathan Bostock had been hired from Abbey National to run the assets which will be disposed of or shut down. Gordon Pell, a long-standing board member, is also delaying his retirement and being appointed deputy chief executive.