Royal Bank of Scotland reported a 14 per cent rise in interim profit today and said it would heed investor fears over a possible risky deal in China.
A source said RBS would pay roughly $2.5 billion for a 10 per cent stake in Bank of China but speculation has been rife.
Some media reports have indicated a figure of $5 billion, spooking investors who fear that the acquisition-hungry bank will overpay for a stake.
RBS chief executive Fred Goodwin described some of the reports as "pretty lurid speculation".
James Hamilton, analyst with WestLB, said the lack of any news on a China deal had disappointed some investors.
Amid a slowdown in UK consumer lending, the bank's strong revenues in corporate banking and the Citizens US unit helped drive total income up 15 per cent.
Credit quality was stable, with lower corporate provisions offset by higher provisions in retail banking, reflecting loan growth and a slight increase in the proportion of customers in arrears, the bank said.
Mr Goodwin said he was not bearish on the outlook for the United Kingdom and that the strain on household finances seen early this year now looked relatively contained.