The chairman of Royal Bank of Scotland sparked anger today by claiming that million-pound pay deals at the institution are "quite low".
Sir Philip Hampton insisted the £1.2 million salary of chief executive Stephen Hester was "not particularly high" compared with other banks and businesses.
But one critic said most people would be "gobsmacked" at the idea that Mr Hester's pay was low.
The fresh controversy surrounding the bank, which is 83 per cent owned by the taxpayer, came as Labour leader Ed Miliband warned bankers risked "isolation" because of their behaviour.
Sir Philip, who gave up his £1.4 million bonus, admitted bosses at the bank "underestimated" the scale of public outrage which led Mr Hester to give up a £963,000 shares reward this week.
But praising the chief executive and his team for doing a "great job", Sir Philip said: "Although their pay is very high in absolute terms, in relative terms to bankers and indeed to top businessmen generally it's not particularly high.
In fact by most measures it's quite low." However, he acknowledged pay in the banking sector had been "high for too long" and needed to be "corrected" to reflect performance.
Liberal Democrat former Treasury spokesman Lord Oakeshott said the comments were evidence of how top pay had got "out of hand". He told the Standard: "He has got a point that by the obscene standards of Bob Diamond at Barclays, Stephen Hester is a pauper. But 99 per cent of people in the country will be gobsmacked to hear that Stephen Hester's pay is quite low by most measures."
Mr Miliband increased pressure on non-state-owned banks to waive big bonuses in a speech at Canary Wharf. He said: "This is a call for banking to recognise that continuing on its current path will lead to further isolation from society, greater public anger, more years in which each payday is a newspaper headline."
