It has been announced today that the sponsorship agreement between Williams F1 and the Royal Bank of Scotland is to terminate at the end of the 2010 campaign - leaving the multiple world championship-winning British outfit in search of a new chief backer.

RBS has been a key Williams sponsor since 2005, and is currently entering year two of a second three-year term with the squad. However, there had been much whispering in the Formula 1 paddock about the stability of the deal, given the Scottish bank's recently-revealed, unprecedented ?28 billion financial loss and subsequent nose-dive in share prices.

With long-time BMW-Sauber supporter Credit Suisse having departed the fray, ING ending its contract with Renault and former grand prix ace Marc Surer suggesting 'all banks will disappear' from the top flight in due course [see separate story - click here], it was reckoned to be only a matter of time before RBS too pulled the plug. That has now been confirmed.

"RBS has been a great partner for this team," remarked Williams co-founder Sir Frank Williams, "and we are pleased to have made our contribution over the past four years to developing the RBS brand internationally. Thanks to the support of RBS and our many other loyal partners, we are in a strong position to ride out the inevitable challenges of the next two years.

"RBS is showing great responsibility to the role that we play in the British economy, supporting over 500 highly-skilled technology jobs in a sector in which Britain leads the world. In the last three years, Williams has spent over ?100 million with 2,700 UK suppliers, and it is of course important that this business endures."

RBS - now almost 70 per cent taxpayer-owned after receiving a ?20 billion government bail-out - also stated that it plans to reduce its F1 sponsorship and related costs by 25 per cent this year and 50 per cent in 2010. To this end, it has cancelled all of its trackside advertising as of next season, reduced its sporting hospitality costs to the tune of some 90 per cent and cut non-contractual F1 expenditure by more than half.

"We recognise that we are now operating in a very different economic environment," acknowledged Andrew McLaughlin, RBS group director of communications, "and [we] have been reviewing all of our activities since October.

"It is imperative that we respond to the reality of the situation we face, and that we do so in an orderly way that respects the commercial agreements we have in place and the implications for our partners and the jobs they support.

"Throughout our relationship, Williams have shown great understanding and innovation in driving the programme forwards. They have been very supportive in finding ways to reduce costs over the remainder of our contract. This early announcement allows Sir Frank Williams and his team to plan ahead financially."

RBS has also hit the headlines of late with news that sporting ambassador and three-time F1 World Champion Sir Jackie Stewart is under pressure to quit his consultancy role with the bank [see separate story - click here], and with the revelation that disgraced former chief executive Sir Fred Goodwin is potentially being lined up to replace FIA President Max Mosley in the most powerful role in international motor racing.