The chief executive of the body set up to manage the UK Government's investments in the banking sector has warned an excessive crack down on pay could damage the value of state's shareholdings by triggering an exodus of talent, amid anger among staff at Royal Bank of Scotland over new curbs on bonuses.

Speaking to the UK's Treasury Committee yesterday, UK Financial Investments chief executive John Kingman said the organisation tasked with managing the government's shareholdings in Royal Bank of Scotland and Lloyds Banking Group had to balance recognition of public outrage at big bonus payments with offering sufficiently attractive packages to retain top staff.