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Business News

'Emotional' Hester admits he nearly quit over bonus

City backlash grows against Government's 'populist pandering' to the banker bashers

Stephen Hester admitted yesterday that he considered quitting as chief executive of taxpayer-owned Royal Bank of Scotland when the row over his £963,000 bonus was at its most "depressing".

"I had to stare over the edge at my own motivation in the last 10 days," he said. "I'm not a robot and there have been some deeply depressing moments over the past three years. I came to the conclusion that it would be indulgent to resign and that I ought to draw on what strengths of reserves I have to make RBS a success."

He denied that he had been under any pressure or been contacted by the Chancellor, George Osborne, or Treasury officials to drop his bonus. Instead he said he had talked to friends who had been "incredibly supportive".

He said: "The difficult thing on these occasions is to detach oneself. All of us get into a bunker and feel a bit sorry for ourselves. But things up close look different if you give them time and space. The decision I reached was that I had invested three years in this and it was worth continuing, overcoming the emotions I had and focusing on the recovery of RBS and the 150,000 people who work for it."

Mr Hester's stance is bound to be looked at closely by Barclays' chief executive, Bob Diamond, who is thought to be carefully considering his bonus in the light of public and political sentiment against bankers. Barclays is due to post its results tomorrow after a tough period for its Barclays Capital investment banking arm.

The City veteran Lord Levene yesterday admitted that bankers had to be sensitive to the public mood, but said the shift had already begun. "People have realised that we can not bury our heads in the sand and pretend it is all going to go away."

Barclays Capital is expected to cut bonuses for staff by as much as 30 per cent, while last night it emerged that Deutsche Bank, a big City employer, was to cap bonuses at €200,000.

Lord Levene went on to scorn politicians for attacking Mr Hester, having been the ones who appointed him and approved his bonus scheme in the first place. In this, he was echoing the widely held view of a majority of City chiefs.

One top banker said: "It is the Government's job sometimes to be robust against populism. All we've seen so far has been blatant pandering to it and that's making a lot of people in the City very angry – myself included."

Asked if he would have taken the job with the befit of hindsight Mr Hester said: "Honestly I don't know. At the time there was a degree of complete selfishness. It was a huge professional test and I'm the kind of animal that likes that."