The chairman of Royal Bank of Scotland has described the pay of the bailed out bank's chief executive Stephen Hester as "modest" in evidence at the banking standards commission.
Sir Philip Hampton said Hester – who can get up to £6m a year from bonuses on top of his £1.1m salary – was paid "well below the market rate of people working in banking".
While conceding it was a "highly paid job" Hampton said "his pay has been modest relatively".
Hester, who is to receive £700,000 of his 2010 bonus next month, defended his bonus by saying the nation was now "off the hook" for a lot of "bad things" of the past.
"My bonus should be assessed on all the things I do," said Hester whose job, according to Hampton, is one the most "difficult" and "demanding" jobs in banking.
"There was never any prospect we could have found and fixed everything immediately," said Hester who has waived his bonus for 2012 and since joining in 2008 has received one bonus of £2m in 2010, which is still paying out in shares.
The pair were speaking after colleagues admitted that they thought it was a "mathematical impossibility" to rig Libor.
John Hourican, the head of the investment bank who is stepping down to take responsibility for the £390m fine, was described as a "human shield" by Andrew Tyrie, the Conservative MP who chairs the commission.
Hourican, who is leaving with a £700,000 payout but sacrificing £5m in bonuses, said he had told colleagues "they should not waste my death" and clean up the culture of the bank.
He told Tyrie the bank "was better served" by his boss, Stephen Hester, and his deputy, Peter Nielsen, remaining in their roles.
Nielsen admitted there were problems with Japanese yen and Swiss franc Libor but said major currencies such as sterling were not affected.
"Senior management felt it was almost a mathematical impossibility" to affect Libor, Nielsen said. He conceded that the bank had been too slow to respond to concerns about Libor and said the first two years after the bailout had been spent trying to save the bank.
Remembering October 2008, Hourican said the bank "had had a cardiac arrest" but added that it was "reprehensible" the rigging of Libor continued after the £45bn taxpayer bailout. The rigging took place between June 2006 and March 2010.
He was leaving, he said, to accept accountability. "I will take the ultimate responsibility," said Hourican.
The bank says 21 staff were involved.
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