On optimistic estimates, reforms might be complete at Hester’s bank before the next election. But no one will know if it will be even worth investing in until weeks before the poll

Roll up, roll up, who wants to buy a share in a loss-making bank that may need more capital and has yet to spin off two subsidiaries?

This opportunity may soon be yours, fellow citizen. Sir Philip Hampton, chairman of Royal Bank of Scotland, said on Thursday he hoped the government would be able to sell part of its 82% stake “as soon as possible” and that it would “be good if we could make that 2014″.

However, meeting that timetable would be going some. There is no iron rule that says RBS has to be a “normal” bank at the point of privatisation. But that has always been the expectation and it is adventurous to think that the goal could be achieved by, say, the autumn of next year. It feels about a year too soon.

Think of the long list of things that still have to happen at RBS. The final stage of restructuring the investment bank has to be undertaken, and more non-core assets have to be shed. Capital levels have to be increased in order to meet the various demands of the Basel and UK regulators – with the latter’s precise thresholds still unclear. The government has to agree to lift the block on dividend payments imposed via the “dividend access share” under the terms of the 2008 bailout. Under orders from the EU, 316 branches have to be sold, probably via flotation as Williams & Glyn’s. And, now that George Osborne is insisting more loudly that RBS be a “British-based bank,” 25% of US subsidiary Citizens has to be floated off.

Those last two actions are probably not essential ahead of privatisation – Williams & Glyn’s, after all, is only 2% of group assets – but the others are.

Negotiations with the government on the access share should be straightforward since both sides clearly want to deal and it’s just a question of price (RBS would have to pay £1bn-£2bn, think analysts). Capital levels at the bank, while still too low, are clearly improving. And chief executive Stephen Hester might complete the rest of financial restructuring within 18 months – after all, on the asset-shedding front, it’s been hard to fault his speed. So, making a few heroic assumptions, the checklist might be completed in 2014.

There’s one final problem. The unveiling of a credible dividend policy – essential to attract retail investors – surely implies that RBS has reached a point where there are some profits to distribute. The earliest RBS is likely to make a clean and meaningful profit is 2014, with the full-year numbers to be announced in February 2015. That, surely, would be the natural moment to start talking seriously about privatisation.

The problem for the government is that it would love to get in ahead of the general election in May 2015. It rather looks as if Thursday’s whetting of appetites is designed to make that politically-dictated timetable seem credible. It’s a risky game to play since a 2014 ambition could be blown off course by events – fresh flames in the eurozone debt crisis, some new banking scandal, and so on.

Common sense suggests the best time to sell shares in RBS would be when the UK economy – the real driver of the value of the bank – is showing some real growth. That is when the state is likely to gain the best return (or smallest loss) on the £45bn invested in RBS.

Osborne, if he wants to hurry things along, should concentrate on addressing Britain’s growth problem. Maybe that dangerous radical, Lord Lawson of Blaby, has him rattled with talk of full nationalisation of RBS.

The European parliament thinks it has fixed the problem of excessive bank bonuses. It hasn’t. It has underestimated banks’ ingenuity and determination to pay top staff life-changing sums.

Placing a cap on bonuses at one times salary (or two times if shareholders approve) will inevitably be met by increases in fixed pay. Indeed, that process is under way already as regulators have demanded that bonuses be paid partly in shares that have to be held for specified periods. The traders wanted to be “compensated” for this change and, by and large, they got their pay rises.

There is, it is true, some pressure in the other direction. Even in banks’ boardrooms, they’ve noticed that the cost of entry to the investment banking casino has gone up. Higher capital thresholds, and lower profits, have led to smaller bonus pools. In their quiet way, shareholders have also demanded a greater share of the spoils for themselves.

But how is the European parliament’s intervention meant to aid this process? It won’t. Instead, banks will introduce higher fixed salaries and convoluted pay schemes. In terms of making banks safer, this measure is most likely to be counter-productive. It’s too blunt.