The Royal Bank of Scotland has announced that its chief executive, Stephen Hester, will not take his bonus of shares worth almost £1m.
Business editor Robert Peston told the Today programme's Sarah Montague that Sir Philip Hampton, the chairman of the Royal Bank of Scotland, said that it would be very difficult for a bank owned by taxpayers to "defy the will of parliament." after Labour called for a vote.
He explained that the government put pressure on RBS to bring forward the announcement on bonuses in the hope of "lancing the boil", but if it had waited until other banks had announced their bonuses, which would probably have been a lot larger, it wouldn't have been seen as badly.
Sir Philip Augur, who worked in the City for more than 20 years running NatWest's global equity and bond business before becoming group managing director at Schroders, maintained that Stephen Hester was worth the proposed bonus because it was in the long term interest of UK taxpayers to get RBS "into really good shape".
He went on to say that the issue of executive pay is a "global problem" and if anything is to be changed there has to be a "concerted effort" led by America for shareholders to exert pressure on banks to stop paying out so much compensation. But, he added, there is little evidence this is happening.
Political editor Nick Robinson said it was significant that RBS declared that it was the calling of a Commons vote by Labour that made the difference.
He said that that bankers may now fear that "politicians have tasted first blood" and there will be many in Westminster who will want to keep this process going.
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