The Financial Conduct Authority (FCA) has imposed a penalty of £5.6 million on the state-owned Royal Bank of Scotland for issues in reporting trades to regulators.

The regulator has alleged that the Edinburgh-based bank did not report more than a third of its investment banking deals during a period of five and half years. Misreporting occurred under the leadership of both Fred Goodwin and outgoing chief executive Stephen Hester. The practice also continued after the bank was contacted by the Financial Services Authority in 2010.

It is estimated that the bank did not report 44.8 million transactions properly and did not report 804,000 transactions at all. The regulator said that much of the misreporting occurred due to RBS's expensive take-over of the Dutch investment bank ABN Amro in October 2007 that led to the bank seeking state bailout in 2008.

Tracey McDermott, the FCA's director of enforcement and financial crime, said: "Effective market surveillance depends on accurate and timely reporting of transactions. We have set out clear guidance on transaction reporting, backed up by extensive market monitoring, and we expect firms to get it right. "

RBS has earlier faced fines of £87.5 million for its role in the Libor fixing scandal and £2.8m for the way it handled complaints over payment protection insurance.