Leverage!

A week (and change) ago we noted:

... Royal Bank of Scotland prepares to offer a bonus of more than £1m to its chief executive, even though the state-controlled bank’s share price has almost halved in a year.

Sir Philip Hampton, chairman of RBS, and the bank’s board are determined to face down political pressure and will press ahead with a bonus payment to Stephen Hester likely to be in the range of £1.3m-£1.5m on top of a salary of £1.2m. Final figures will be settled next month. ..

Welll, despite Sir Philip and his board's chesty determination, the chief executive of the Royal Bank of Scotland, a wholly-owned subsidiary of the British Guvmint due to recent louse ups among the swifties in charge of banking, caved:

Stephen Hester, head of the Royal Bank of Scotland, gave way to heavy political pressure last night to forego his £963,000 bonus.

The final straw for the RBS chief executive appears to have been the looming threat of a vote in the House of Commons condemning the Government for failing to block the payment.

He is reported to have feared becoming "a pariah" over the controversy. ...

There's no "right" here. No "justice." There are people who think that Mr. Hester has done a fabulous job and deserves every penny of his bonus, that a contract's a contract, that RBS has to uphold its end of the deal and cough up the dough.

Etcetera.

But guess what? It's all about the leverage. The Cameron government can see they're not holding winning cards here. They can't on the one hand bellow about "sacrifice" and "austerity," then turn around and give Stevie Hester his money.

They get killed politically.

So Steve H. now does the patriotic thing and doesn't take the moolah, and a little time will pass ... and then (very quietly) the Royal Bank of Scotland will find some other way to slip Steve a few tokens to show its appreciation and gratitude for services rendered.

They'll just be sure that the tv cameras and reporters are looking the other way.