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Royal Bank of Scotland paid contractors almost £400 a day to stuff envelopes, according to the Press Association.

The bank said the people were hired for more skilled jobs, but were used as "short-term support" on "a limited number of occasions".

It refused to say how many contractors had helped out with secretarial work.

But RBS - which is 62% taxpayer-owned after its emergency bailout in the financial crisis - is estimated to have wasted thousands of pounds, says PA.

Contractors who worked at the RBS offices in Manchester in certain periods last year and this year told the Press Association they were paid £330 pounds a day - excluding VAT - to help with mundane tasks such as sending PPI letters to customers.

Usually, such roles would be paid at the minimum wage.

"We do not hire contractors at this rate to do this type of work," said the bank.

"When we employ contractors, they are paid in line with industry rates according to their experience and skills.

"There have been a limited number of occasions when we have used short-term support from other areas of our business to ensure we are delivering on time and in line with our commitments for our customers."

The issue will be a blow for chief executive Ross McEwan who told the ³ÉÈË¿ìÊÖ last month that it could take as long as ten years to rebuild trust in the bank.

RBS's reputation has suffered since the financial crisis.

It has been forced to pay billions in compensation to settle allegations of the mis-selling of payment protection insurance (PPI) and mortgage-backed securities.

The bank has also been criticised for its poor treatment of many small business customers in the aftermath of the financial crisis.

A ranking of banks, published in August, found that fewer than half of Royal Bank of Scotland's customers would recommend its customer service to friends and family.

The figures - from the Competition and Markets Authority - ranked RBS joint bottom of the personal banking league table, along with Clydesdale.

It was also ranked bottom for business banking.