In his first interview since the row over his bonus Stephen Hester, the chief executive of the Royal Bank of Scotland, has admitted that he "underestimated" the outcry the £1 million payment would cause.

Speaking to Today presenter James Naughtie, Mr Hester revealed that he had considered quitting, adding that he was not a "robot" and that there had been some "deeply depressing" moments during the furore over the payment.

But "in the end," he explained, "I came to the conclusion that it would be indulgent for me to resign".

Mr Hester explained that one of the aims of RBS - 83% of which is currently owned by the British government - is to reconnect the job they need to do for the country with what the public think of the bank.

Explaining that he had "great sympathy and understanding" with those who were concerned about the high level of rewards in the banking industry, Mr Hester said that RBS had had to recruit the best people to resolve the problems it had inherited from the former management.

"We had to go around the world looking for the best people, not just people to run a bank well, but people to defuse the biggest time bomb in history in terms of bank balance sheets.

"Those people are doing a good job. I think they deserve recognition. If they do a good job, it is our task to make sure that there is a connection between the job people are doing and how they get treated."

But he conceded that the banking industry had been over-confident and that people working in it were "over-rewarded".

Yesterday, in a memo to RBS staff, Mr Hester - who last week waived his £963,000 share bonus - urged the bank's staff to "prove the critics wrong".

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