LONDON - THE head of Royal Bank of Scotland, which is 70 per cent owned by the state, has agreed to defer a chunk of his controversial pay package for two years, the bank said on Thursday.

MOVE APPLAUDED THE Association of British Insurers (ABI), which represents about one fifth of investors in Britain, applauded the move. 'This is a significant and welcome development,' said Mr Peter Montagnon, ABI director of investment affairs. ... more

The group revealed last week that chief executive Stephen Hester would be paid more than 9.6 million pounds (S$22.6 million) in cash and shares in return for the bank's long-term success.

But the news sparked shareholder unease because RBS was bailed out by the taxpayer last year amid the collapse of the global banking sector.

Mr Hester had been offered a basic annual salary of 1.2 million pounds, about two million pounds in annual non-cash bonus payments and some 6.4 million pounds in long-term share and stock option awards, in addition to a pension.

However, on Thursday a company spokesman confirmed that more than half of the long-term awards - a potential 3.4 million pounds - would be pushed back two years until 2014.

Mr Hester will receive his hefty pay deal should the share price of RBS pass 70 pence. In London trade on Thursday, it stood at 39 pence after tumbling over the past year after the government's gigantic bailout. -- AFP

Last month, Mr Hester's predecessor Fred Goodwin agreed to take a 40 per cent pension cut following public anger over his deal.

Mr Goodwin, who came to symbolise the greed of bankers blamed for the worst financial crisis in decades, saw his annual pension cut to 342,500 pounds after being forced out.

RBS was ravaged by the credit crunch and its 2007 takeover of Dutch group ABN Amro at the top of the market. Last year, it recorded Britain's biggest-ever corporate loss of more than 24 billion pounds. -- AFP