Coalition divisions emerging over Hester bonus row

By Alex Stevenson

Differences of opinion are emerging within the coalition over its response to the RBS bonus row.

Anger over RBS chief executive Stephen Hester's £1 million bonus is broadening out into wider scrutiny of the remuneration still enjoyed by bankers working for failing organisations.

State-owned RBS is particularly sensitive, given its weak commercial performance in 2011. A number of other senior figures at the high street bank are in line for large remuneration packages totalling over £2 million.

But CBI president Sir Roger Carr used a comment piece in the Times to complain about the "vilification" of Mr Hester, who agreed he would not accept the bonus payout at the weekend. He argued: "This cannot be in the long-term interest.

"The row has ignored the fact that a talented man with many opportunities for personal enrichment has chosen to accept a job that few were capable of doing and even fewer had the appetite to undertake."

No 10 has been clear that it will not 'micromanage' RBS, despite the taxpayer holding an 82% stake in the bank. David Cameron said yesterday that the Labour government had set up the terms of the bank's management structure – but made clear the coalition was not prepared to revise them.

Downing Street's view appeared to clash with business secretary Vince Cable's, who said Mr Hester had "set a good example" and called for "more of a sense of perspective" in the banking sector.

"We have got to focus on what the bank is for and what the performance actually means," he said.

"I just want to focus very clearly on getting proper bank lending to good British companies."

A Lib Dem Treasury source quoted by the Mail appeared to agree, arguing the row over Mr Hester's bonus meant action needed to be taken to prevent further controversy.

"Rather than just sighing and saying 'this isn't ideal, but there's not much we can do', we need to look at what has happened and get a grip on the issue. Surely once bitten, twice shy," they said.

Labour leader Ed Miliband denied being part of a "witch hunt" against bankers.

"I think this culture is going to have to change, and I think there are lots of people in business who recognise this and who say, 'Actually, we need banks and a financial services industry that is properly going to serve industry and not serve itself'," he said.

"That has got to change," he said.