The government’s Hester problem intensifies

First there was Fred Goodwin, now there’s Stephen Hester. The chief executive of RBS is fast becoming the bête noire of the British banking system, thanks to his roughly £1 million share bonus which, we learn in the Sunday Times (£) this morning, may be topped up with an extra £8 million over the next few years. Little wonder that Iain Duncan Smith admitted on the Marr show earlier that there may be a severe public backlash, and that the government could suffer from it. He suggested that it would be better, for all concerned, were Hester just to forego the million.

It’s one of those debates where it’s easy to see and understand both sides of the argument. On the one hand, the government can’t see RBS sunk, not least because it wants a return for taxpayers, so it has to be careful about retaining and attracting the best possible staff — so that means competitive wages.