The Chief Executive of the Royal Bank of Scotland (RBS) has bowed to intense public and political pressure and waived his near £1m bonus.

RBS is 82 per cent owned by the UK taxpayer after a loss of £24.1bn, the largest annual loss in UK corporate history, led to it being bailed out by the government in 2008.

The bank was also heavily involved in the payment protection insurance scandal where it is estimated to have earmarked around £1bn to cover the cost of PPI compensation claims.

Stephen Hester, who already earns £1.2m a year – 46 times the average salary of an average employee - rejected the £963,000 shares-only payment following days of speculation including a Labour-triggered Commons vote.

The news comes after the Financial Services Authority (FSA) urged banks to curtail bonuses after the multi-billion pound payment protection insurance mis selling scandal.

Payment protection insurance was sold to millions of customers across the UK who took out a loan or credit card. The policy was useless to many, including the self employed, whilst others were pressured into PPI or totally unaware it was added to their credit agreement.