RBS denies it’s about to award £1.5m bonus to Hester

The speculation on Mr Hester’s bonus came as Prime Minister David Cameron appeared to defend the payout for being much smaller than last year.

But with MPs angry over the lack of support for businesses from the 84 per cent state-owned bank, there was a clamour for the government to use its majority shareholding to block a large bonus.

There was also pressure from MPs for ministers to force the bank to back the struggling high street clothes shop chain Peacocks, which is on the verge of going out of business.

The Prime Minister said no decisions had been taken on bonus payments at the bank. But he insisted Mr Hester would get significantly less than the £2m he received last year.

“I can tell you something: if there is a bonus, it will be a lot less than it was last year,” Mr Cameron said during questions and answers following a speech in London.

“The processes that are set out should be followed in the proper way.”

Earlier, the chairman of RBS, Sir Philip Hampton, denied a report that it was preparing to offer Mr Hester a million-pound-plus bonus pay-out.

Reports yesterday said Sir Philip and the board were determined to resist political pressure to curb bonuses and make an award in the range of £1.3m to £1.5m, on top of his £1.2m salary.

Sir Philip said in a statement: “The reports in the media this morning are both inaccurate and premature.

“Neither the remuneration committee nor the board has discussed the position on the bonus for our CEO for 2011 at this stage. Any suggestion to the contrary is, therefore, untrue.

“The board will act in accordance with its usual governance timetable and consider executive remuneration following conclusion of the shareholder consultation.”

Meanwhile, MPs said ministers should stop the state-owned RBS from withdrawing its support of the clothing outlet Peacocks.

The chain fell into administration last night, threatening some 10,000 jobs and the closure of 700 shops across the UK, after discussions with lenders, including the bank, broke down.

Liberal Democrat MP Sir Bob Russell said the government had the power to step in.

In a question to Commons leader Sir George Young, Sir Bob said: “The Royal Bank of Scotland was bailed out with billions of pounds of public money, thousands of RBS jobs were saved, presumably including those who run RBS.

“But RBS is currently pushing Peacocks department store, 700 shops and 10,000 jobs towards administration.”

He asked: “Is it not the role of government, when it owns the bank, to intervene – and can we have a debate?”

Sir George said: “I would be cautious about the government intervening and trying to micro-manage lending decisions, which I think are best taken by the banks.”