A £963,000 bonus for the boss of a taxpayer-funded bank has been attacked as “out of touch” by Labour.

Royal Bank of Scotland chief executive Stephen Hester’s payout was limited to around 60% of the maximum following intense political pressure.

The senior City figure, who has a salary of £1.2 million, could get 3.6 million shares in the bailed-out financial institution, which is 83% state owned.

The Opposition said that the scale of the payout showed the Government was “desperately out of touch” with voters and not serious about reining in executive pay and perks.

Concern was also raised by Deputy Prime Minister Nick Clegg’s chief political adviser Norman Lamb who said he, and most people, would be “deeply uncomfortable with a bonus of that size”