The Prime Minister said it would be "completely wrong" for bank bosses to leave in the wake of scandal with "vast payouts".

Labour's former city minister, Paul Myners, has warned former chief executive Mr Diamond could depart the bank with up to £30 million. A reported almost £20m of unvested – or provisional shares –have been awarded over recent years to Mr Diamond, who earned around £18m last year alone. However, Mr Diamond appeared to resist calls to give up his payout yesterday.

In a bruising exchange at the Treasury Select Committee, Bassetlaw MP John Mann pushed Mr Diamond to give up millions of pounds he could be due in shares. Challenged that not having known about the abuses amounted to gross incompetence, Mr Diamond stressed that the investigation he had put in place was "market leading".

"As I said earlier, that is a discussion with the board. I don't make that decision," the banker replied.

Mr Diamond also dodged a call from Mr Mann for him to give some "serious money" to charity to make amends for the failures.

Earlier Mr Cameron had said that senior banking executives who quit because of such scandals should not take up lucrative severance packages.

"It would be completely wrong if people who were leaving under these circumstances were given some vast payoff," he said. "I very much hope that it doesn't happen."

He was speaking in response to Tory MP Sir Peter Tapsell, who had urged the Government to "ensure the delinquents are not able to walk away with their bonuses and severance payments".

The Prime Minister also condemned what he described as the "spivvy and probably illegal" activity in the banking rate-fixing scandal.