Royal Bank of Scotland's chief executive has admitted he had "underestimated" the uproar his £1 million bonus would cause.
Stephen Hester, who heads up the 83 per cent state-owned bank, disclosed that he had considered resigning amid the political storm, but also revealed he felt responsible for defusing the "timebomb" of the bank's balance sheet.
"In the end, I came to the conclusion that it would be indulgent for me to resign," he told journalists.
Mr Hester said he decided to waive the bonus - to be paid in bank shares - because of the damage the row was doing to the bank.
"I took the judgment that it was going to be damaging for RBS to stay in the intensity of the spotlight that we had got into," he said.
While he said he had "great sympathy and understanding" for people concerned about the high rewards in the banking industry, he explained it was essential that RBS was able to recruit the best people to resolve the problems it had inherited.
"When I was asked to take on this job three years ago, I had to replace the whole senior management team of RBS," he said.
"Those people are doing a good job. I think they deserve recognition. If they do a good job, it is our task to make sure that there is a connection between the job people are doing and how they get treated."
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