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RBS chairman says bankers' pay 'high for too long' RBS chairman says bankers' pay 'high for too long'
(about 1 hour later)
The chairman of the 82% taxpayer owned Royal Bank of Scotland (RBS) has said banker pay has been "high for too long" and needs to be "corrected". The chairman of the 82% taxpayer owned Royal Bank of Scotland (RBS6) has said banker pay has been "high for too long" and needs to be "corrected".
But in an interview with the BBC's Today Programme, Sir Philip Hampton defended his decision to award a bonus to chief executive Stephen Hester. Sir Philip Hampton defended his decision to award a bonus to chief executive Stephen Hester.
He said the board "underestimated" the reaction that later caused Mr Hester to turn down his bonus. Speaking to the BBC he said the board "underestimated" the public reaction that later caused Mr Hester to turn down his bonus.
RBS needed to be run by the "best people" on "competitive" pay, he said.RBS needed to be run by the "best people" on "competitive" pay, he said.
"Stephen Hester has one of the most challenging and demanding jobs, I think literally, in world business," said Sir Philip."Stephen Hester has one of the most challenging and demanding jobs, I think literally, in world business," said Sir Philip.
Falling pay But he said the public hostility to bonuses had prompted the board to think again about how they provided staff with incentives.
"Although their [Hester and his team] pay is very high in absolute terms, in relative terms, compared to bankers and indeed top businessmen generally its not particularly high. In fact, by most measures, it's quite low." "We are a commercial organisation competing in extremely competitive markets, I think its highly unlikely that we'll have the best possible people to do that if we don't pay appropriate amounts," he said.
Sir Philip accepted that pay needed to come down in the industry as a whole. "Now the amounts are high by absolute standards but by relative standards what Stephen Hester is getting is not high at all, in fact its quite low."
'Dislocation'
However, Sir Philip accepted that pay needed to come down in the industry as a whole.
"Essentially, particularly in the banks, particularly in the investment banks, shareholders have done pretty badly and employees have done pretty well. That needs to be corrected," he said."Essentially, particularly in the banks, particularly in the investment banks, shareholders have done pretty badly and employees have done pretty well. That needs to be corrected," he said.
However, he added that "pay is falling" in the industry.
'One nation' Sir Philip said business people in general were "very aware" of the politics surrounding pay and of a "dislocation" between top business people and ordinary people.
He said elements of campaigns against inequality were "perfectly reasonable."
"Where I have more reservations is where the debate becomes hysterical rather than analytical or reasonable and I think we saw something of a witch hunt, something of a mob mentality around an issue," he said.
Social responsibility
Sir Philip's comments came as the Labour leader, Ed Miliband, called for a culture of "one nation banking" in which financial institutions are not "isolated" from the rest of society.Sir Philip's comments came as the Labour leader, Ed Miliband, called for a culture of "one nation banking" in which financial institutions are not "isolated" from the rest of society.
Mr Miliband had called for the government to block the bonus to Mr Hester and will press for a vote on bonuses in parliament next week.Mr Miliband had called for the government to block the bonus to Mr Hester and will press for a vote on bonuses in parliament next week.
Other top bankers have also warned about pay.Other top bankers have also warned about pay.
On Thursday, the chief executive of Deutsche Bank warned of a "social time bomb" from rising wealth and income inequality.On Thursday, the chief executive of Deutsche Bank warned of a "social time bomb" from rising wealth and income inequality.
He suggested top earners have a "social responsibility" towards philanthropy.He suggested top earners have a "social responsibility" towards philanthropy.