RBS is 83% owned by the taxpayer after the government bailed it out
The chairman of the part-nationalised Royal Bank of Scotland (RBS) has conceded that many bank employees earn too much.
Sir Philip Hampton said it was very difficult to defend the massive gap between what most people earned and what some bank employees were paid.
He said "bankers' pay continues to be astonishingly high".
However, he told BBC Radio 4 that the banks had no choice if they wanted to retain the best people.
"If we don't pay our top people [appropriately], they leave very quickly," he said.
"Our top people are very much in demand and we have seen a significant loss of our top people."
But Sir Philip admitted that it was "difficult to defend the massive differential" between bankers' pay and that elsewhere in the economy.
RBS is 83% owned by taxpayers after it was bailed out by the government.
Earlier this week, Sir Philip vowed to listen to investor concerns over its new bonus scheme for top bosses.
A quarter of performance-linked rewards are triggered when RBS's share price hits 50p, but that target has already been met.
This has angered some investors, who have seen shares slump and dividends scrapped since the bank was bailed out.
At the bank's AGM on Wednesday, shareholders called for assurances that performance rewards would be toughened up.