Hester Breaks Silence Over RBS Bonus Row

The head of the Royal Bank of Scotland has broken his silence and written a memo to his staff describing the recent furore over his bonus as "discomforting at least".

Stephen Hester wrote the memo to RBS employees after bowing to intense political pressure and waiving his annual bonus of shares worth £963,000.

The bonus would have been on top of his £1.2m salary.

He wrote: "I am acutely conscious that the way our company has been in the media and political spotlight this last 10 days is discomforting to say the least."

The letter follows a call from the Labour party for all British banks to cut bonuses.

Mr Hester also revealed that the cost of restructuring RBS since 2008 has been £38bn.

On Wednesday he also gave his first interview since the bonus furore.

Mr Hester told BBC Radio 4's Today programme that accepting his bonus would have been "damaging" to RBS.

He said his pay was determined by others but admitted that bankers had been given too large rewards in the past.

Mr Hester also revealed that he considered resigning during the bonus uproar when he experienced "deeply depressing" moments.

His comments came as all UK banks prepare to announce bonus packages for 2011.

In the letter to staff Mr Hester wrote: "...while it has been personalised in different ways, whether on myself or my predecessor, many have felt a broader impact on RBS of the uncertainty and criticism."

The huge bonus - amid Government calls for pay restraint - sparked outrage among trade unions and Labour because RBS is now 82% state-owned.

Mr Hester said that while the bank could not control the economic or political environment, it had proved over the last three years that it could "overcome great obstacles".

"There is no doubt that our position in the spotlight makes the job harder," he wrote.

"And we can't know how much damage that will do to RBS or the interests of those we serve, whether as customers or shareholders. But the best way to deal with it is to prove the critics wrong."

He thanked staff who had sent him messages of support, saying it was "much appreciated".

Former RBS chief executive Fred Goodwin was stripped of his knighthood last month.

On Tuesday evening Chancellor George Osborne vowed to fight the "anti-business culture" that has arisen following the row over bank bonuses and executive pay.

In a speech to the Federation of Small Businesses, he warned that current rhetoric was putting jobs at risk and said the UK economy should be built on "rewards for success".