Mr Darling said bonuses at RBS would be cut from the £2.5bn paid last year to £340m. There will be "no reward for people who have failed," he added.
And bonuses will no longer be paid in cash, but in shares.
The bank will pay "the minimum it can with regard to its legal obligations," the chancellor said, referring to the fact that some employees are contractually obliged to receive bonuses.
The idea of a bonus limit is sound enough to my mind, and Darling seems to have made the right broad brushstrokes in this case. Politically, though, I can't see this doing Labour much good. David Cameron keyed into the public mood first, by calling for a £2,000 bonus cap at all taxpayer-owned banks last weekend. And there’s a sense that there are more tales of City excess and ineptitude waiting to embarrass the Government – cf. Paul Waugh's discovery that Sir James Crosby is in line for an annual pension of £572,000 from HBOS.