David Prosser: Bankers battling to keep their bonuses

Outlook Anyone who thinks bankers have given up their opposition to pay restraint should look up the remarks made on Wednesday by Penny Hughes, the Royal Bank of Scotland's non-executive director who chairs the bank's remuneration committee, to an Association of British Insurers conference.

While the Governor of the Bank of England was eating humble pie in front of the TUC, Ms Hughes was telling the ABI's delegates, mostly representatives of institutional investors, that one reason bankers' rewards had got out of hand was that the banks had been forced to publish more details of pay and bonuses in recent times.

Bankers being a competitive bunch, Ms Hughes argued, greater pay disclosure has led to spiralling wage demands. Senior bankers are not prepared to settle for, say, £2m a year, when the annual report published by the bank next door reveals their rivals are earning £3m. To press home the point, Ms Hughes warned that countries such as Sweden were missing out on the top talent because their legislation now prevents executives being paid the level of rewards that many of them expect.

Ms Hughes's comments may have been slightly more nuanced than the overt threats made by her board last year – let us pay the bonuses we want to or we'll quit – but her message was the same: if state-owned RBS can't pay top dollar, it will lose its stars (and, by the way, shareholders, including taxpayers, are to blame for this mess because they have demanded details of how much the companies they own are paying their staff).

We have been down this road before. In February, RBS's chief executive, Stephen Hester, claimed that the bank had lost out on £1bn in profits that his best people would otherwise have brought in had they not quit in frustration at their limited compensation. Challenged to give details of how he had arrived at this figure, however, Mr Hester was curiously quiet.

As for the idea that if we go on complaining about bankers' pay, Britain might turn into another Sweden, well bring it on. That will be a Sweden that suffered a much less severe recession than the UK and bounced back more quickly and more strongly. That will be a Sweden where unemployment is lower than in this country and where the public finances are among the strongest in Europe (its projected deficit for this year is just 2.1 per cent).

In addition to her RBS role, Ms Hughes had served on the board of one of Sweden's largest financial services groups, so she will no doubt be aware that the country's finance minister, Anders Borg, is one of the staunchest defenders of the City of London outside this country. No wonder: while Britain's banks go on demanding the right to pay what they see fit, Sweden is doing very nicely, thank you.