The Scotsman reported, that following her appointment, Ms Rose said RBS faced “a series of challenges”.

Ms Rose was the favourite to succeed as chief executive after Ross Mcewan when he leaves the company on October 31st.

She is currently the bank’s chief executive for its commercial and private banking arm, as well as deputy CEO of Natwest Holdings. She will receive a basic salary of £1.1 million at RBS, which remains part-owned by the taxpayer.

Ms Rose joined RBS 27 years and she will take up the top post on November 1st after an “orderly handover” has occurred.

Her appointment will make RBS the only company in the FTSE 100 index with women in its top two executive positions, joining chief financial officer Katie Murray.

Ms Rose said: “This is an exciting time as we enter a new chapter for this bank. Our industry is facing a series of challenges; from the ongoing economic and political uncertainty to shifts in the behaviour and expectations of our customers, driven by rapid advances in technology. It will be my priority to make sure we are ready to meet these challenges and build the best bank for families, businesses and communities. We will be driven with real purpose in our work to help achieve the goals and potential of our customers and be there for them at key moments in their lives.”

Howard Davies, RBS chairman, said: “Following a rigorous internal and external process, I am confident that we have appointed the best person for the job. Ross leaves a strong platform for his successor; a bank that has refocused on its core markets in the UK and Ireland and resolved all its major legacy issues, while returning to profitability and paying dividends. Rose’s pay package includes a base salary of £1.1m and a fixed share allowance set at 100 per cent of salary.

RBS said remuneration had been set “at a level that reflects the fact that the current CEO’S salary has been unchanged since his appointment in 2013”. Pension funding has been set at 10% of salary, in line with the rate applicable to the wider RBS workforce.

Variable pay will be delivered entirely in shares as long-term incentive awards, with a maximum award of 175% of salary. Ms Rose will be required to build up and maintain a minimum shareholding equal to 400% of salary.

During his employment, Mcewan was on a basic salary of £1m, no payment will be made in lieu of notice.

Gary Greenwood, Shore Capital analyst, said: “Following a somewhat protracted process, RBS has finally announced the appointment of Alison Rose as an executive director and the group’s new chief executive officer. Alison was widely viewed as the leading candidate for the role and so her appointment should not really come as a surprise.”