The under-pressure Chief Executive of RBS Stephen Hester last night announced that he was to waive his proposed £963,000 bonus after growing outrage at his remuneration package.
Mr Hester's move came hours after the Labour Leader, Ed Miliband, had forced a vote in the House of Commons to give MPs the chance to debate whether they approved of the payout, and in the face of mounting pressure after the company's Chairman, Sir Philip Hampton, announced that he was refusing his own £1.4m share package.
Mr Hester, right, is thought to have felt that he had become a pariah figure and the pressure will now switch to chief executives of the other big banks as the bonus season gets under way.
The Group Chief Executive of Barclays, Bob Diamond, is set to hear of his remuneration package within the next two weeks.
The part state-owned Royal Bank of Scotland was on a collision course with Parliament over the proposed bonus after Mr Miliband said that he believed the issue had become a focus for public anger at irresponsibility in the boardroom, and exposed a weakness in David Cameron's leadership.
On his blog last night, the Labour leader claimed: "[Cameron]'s been found out. He was asked if he would veto £1m bonuses at RBS. He replied: 'The short answer is yes.' Having said that, it is ridiculous for him either to suggest he cannot do anything about it now – or pretend he has achieved that pledge by ensuring Mr Hester's bonus comes just short of seven figures.
"He and George Osborne are caught between what they really believe and what people think. They do not give a monkey's about tackling irresponsible capitalism or the bonus culture."
Earlier, the Work and Pensions Secretary, Iain Duncan Smith, and the Treasury Chief Secretary, Danny Alexander, both insisted it was not the Government's role to decide how much Mr Hester is paid.
Mr Duncan Smith stuck to the Government's claim that it was powerless to prevent the bonus being paid. He said: "The contract that we inherited from Labour meant that the board takes the decision on this. You can't interfere and tell them what to do. The only option would be to get rid of the board. Now if you do that, you'd have chaos."Reuse content