Sir Philip Hampton said it was difficult to defend the gap between what most people earned and how much some bank staff were paid.
He added that banks had to pay high sums if they wanted to keep "top" people.
But Sir Philip told BBC Radio 4: "If we don't pay our top people they leave very quickly. Our top people are very much in demand and we have seen a significant loss of our top people."
RBS is 83 per cent owned by the taxpayer.