‘Hester is relatively low-paid banker’ – Hampton

Speaking to Channel 4 News Business Correspondent Sarah Smith, he defended awarding RBS chief executive Stephen Hester a £963,000 bonus, saying his role was “certainly the most challenging job in world banking.”

After days of political pressure, Mr Hester waived his bonus earlier this week, but Sir Philip said that he hoped the furore had not dissuaded his chief executive from doing the job.

“He hasn’t talked about resignation…I very much hope that despite being effectively constrained to waive his bonus, that he will stay,” he said.

Sir Philip said that Mr Hester was one of the few people who could do the job of chief executive at the bank, which involves balancing the priorities of a commercial entity with the responsibilities of being part-owned by the government.

He is actually quite low paid, relative to people arguably doing much less challenging jobs than he is doing in the banking sector. Sir Philip Hampton

“It’s very much in the interests of the British taxpayer that they do a great job. One penny on the share price is £900m – so we’ve got to get this right, with the right team,” he said.

And he added: “Although a lot of people find Stephen Hester’s total remuneration package difficult to understand, he is actually quite low paid, relative to people arguably doing much less challenging jobs than he is doing in the banking sector.”

Bonuses and controversy

Bankers’ bonuses and responsibilities have been at the forefront in recent weeks not just because of Mr Hester’s pay packet. Earlier this week former RBS boss Fred Goodwin – who oversaw the bank’s rapid rise and then fall into part-nationalisation in 2008 – had his knighthood cancelled and annulled for bringing the honours system “into disrepute”.

Sir Philip told Channel 4 News – perhaps with his tongue slightly in his cheek – that knighthoods had not been in his mind recently, but he said that businesses across the world were currently confronting the difficult issue of high pay to address “widespread social concern”. It also emerged on Friday that Network Rail chiefs are in line for bonuses totalling hundreds of thousands of pounds.

Read more from Channel 4 News: Anatomy of a state-owned bank

“I know absolute pay in the banking industry remains very high, but it is falling, it is falling to reflect declining returns, declining profits in the banking industry. So I can understand the public mood,” Sir Philip said.

“I think it’s wrong to think that there aren’t corrections taking place, and it also may be that some of these corrections need to be more radical, quicker.”

Politicians have also seized on the banking issue in a bid to win popular support. Earlier, Labour leader Ed Miliband repeated his calls for “responsible capitalism”, this time in a speech at the Thomson Reuters building in London.

Sir Philip said there was a place for morality in banking.

“I think morality has a place in business but so does commercial judgement as well and historically they have not necessarily been easy things to reconcile.

“But we need to behave properly to our customers, to our shareholders, to our employees, and they are probably all moral-type things. But at the end of the day we’ve got to run the business on commercial grounds in order to make an appropriate return to our shareholders and make sure that the taxpayer can get their money back in this bank.”