James Moore: Hester deserves his seven-figure bonus for plugging huge hole in sinking RBS

If Stephen Hester gets cross enough he might pull a trigger of his own and walk

Sooner or later Royal Bank of Scotland is going to have to end the Mexican stand-off that has developed over its chief executive Stephen Hester's bonus. It is hard to see the bank's affable chairman, Sir Philip Hampton, in a cowboy hat with a pistol at the ready, Ed "the Kid" Miliband facing to his left, "Diamond" Dave Cameron and the Coalition posse to his right, and the brooding form of "Six Gun" Steve and the banking bandits opposite.

But a veritable gunfight at the UK Corral is certain to erupt when he pulls the trigger on Six Gun's seven figures.

The view in banking circles is that Mr Hester should get his money. Despite putting his foot in his mouth with alarming regulatory, Royal Bank's chief executive appears to be plugging the enormous hole in what once looked banking industry's Titanic. The share price have been sinking, but RBS is still just about swimming financially and is in sight of the shore. Although it could easily be knocked off course by that riptide called the economy, there has been no suggestion that the bank will have to call on the Government's "asset protection scheme", at least not yet.

What is more, by comparison to his peers Mr Hester is something of a pauper. Much was made of the £10m package he was handed when he joined RBS. But that was a maximum. Barclays' chief executive, Bob Diamond, might get that much just for last year's work. While running Barclays could hardly be described as a picnic, Mr Diamond is sitting comfortably in the saloon with a whiskey in his hand by comparison to what Six Gun has to put up with.

Sir Philip knows this. He also knows that the debate over bonuses is, if anything, even more heated this year than last year. The public-sector squeeze is now really starting to bite. Inflation has remained stubbornly high and wages have come down.

The view in banking circles is that having passed on last year's train robbery they derived no great benefit. Their critics gave them five minutes of peace before returning all guns blazing. This year they're planning to take the cash and take the flak.

The public's understandable unhappiness at such behaviour when even those banks that didn't receive a bailout were none the less kept going by the billions of pounds of public support that was advanced to keep the whole financial system from blowing up, simply doesn't register.

Caught in the middle of all this, Sir Philip is in a difficult position. The politicians are demanding restraint, but he also knows that if Mr Hester gets cross enough he might pull a trigger of his own and walk.

Sir Philip's views are said to be in line with the industry's, namely that Six Gun should indeed get his seven figures or something approaching it.

If that is true, then he ought to come out and say so. He should make the case, and if that means getting shot at by just about everyone, so be it. The chairman's lot is not a happy one, but the longer he and his colleagues dither, the worse the firefight will be.

Sir Stelios will use his power over pay

Part of the problem with Business Secretary Vince Cable's plans to give shareholders more power over pay is that the institutions hardly use the powers they already have. It could even be argued that giving shareholders votes on executive pay that carry real force will make them less likely to use them. On those rare occasions when institutions have used the advisory votes on remuneration reports they have now to vote one down, the company concerned usually has them around for a nice lunch before making a few cosmetic tweaks.

That won't work any more and there is a real possibility that institutions will be too afraid of the consequences to use their powers.

Step forward Sir Stelios Haji-Ioannou. Sir Stelios has been running a guerrilla campaign against easyJet for some time now and, with nearly 40 per cent of the voting shares under his control, managed to get easyJet's remuneration report voted down last year.

His critics might question the motivation behind his campaign. They might suggest that if he is so unhappy with the way easyJet is being run then he ought to end the charade and table a bid. Interestingly, though, the corporate governance watchdog, Pirc, also advised a vote against easyJet's remuneration report. So whatever his motivations, Sir Stelios was on the side of the angels.

And he's still not happy. If the institutions don't have the guts to use the powers Mr Cable is handing them, Sir Stelios surely will. EasyJet's chief executive, Carolyn McCall, might be best advised to avoid making any big financial commitments.

Brussels regulator ruffles feathers on trip to UK

If the EU's top regulator, Michel Barnier, was trying to smooth ruffled feathers yesterday, he has a funny way of showing it. In a speech at Guildhall he said he wanted Britain to stop seeking exemptions for the City and instead return to the heart of Europe. He also vehemently denied British fears of a Franco-German plot to torpedo the City. But in a separate interview he raised the possibility of a cap on bankers' bonuses if they don't heed calls for restraint (they won't). This could take the form of a maximum based on a multiple of the pay of junior staff. Such an idea would be hugely popular with the public. It would go down like a lead balloon in the City. It would also create a nasty problem for the Conservative part of the Coalition. Its response to such a proposal will be fascinating to watch.