RBS payout sparks public anger

After weeks of speculation, Royal Bank of Scotland (RBS) confirmed on Thursday evening that its chief executive officer, Stephen Hester, would receive around £963,000 from a bonus of 3.6 million shares.

With the government holding an 83% stake in the bank, controversy has surrounded the payout during a time of increased austerity. Shares took a turn for the worse in early trading on Friday, but by mid-morning were heading back toward their opening price.

"Ministers have said that shareholders should play a more active role in reining in excess where they see it," Chuka Umunna, UK shadow business secretary, told the BBC. "This is in the main a publicly-owned institution, and the Prime Minister has failed to do so. People listening to this programme will be flabbergasted that nothing has been done about this."

The payment came amidst a further rationalisation of the institution's investment banking operations, with the "wholesale banking" business being separated into "markets" and "international banking" divisions - alongside a planned total of 3,500 job cuts during the year.

Prime Minister David Cameron has been attempting to navigate between the rock of public opinion, angered by bonus awards to boards in firms bailed out, and the feared hard place of executive flight if payouts are not competitive. Cameron decided to draw his line in the sand at the £1 million mark - although so far this has done little to calm the furore, which has become a familiar annual spectacle.

UK Financial Investments (UKFI), the body that manages the government's stake in businesses acquired during the financial crisis in 2008/09, was less apologetic in its approval of the payment package, commenting that Hester's level of remuneration "reflects the significant contribution" that he has made to RBS over the past year.

For an understanding of what to look for when considering exposure to the sector, read: Analysing... Banks.