AMSTERDAM (Reuters) - Top Dutch financial services company ING Groep NV INGA.AS on Tuesday scrapped a planned 50 percent pay increase for CEO Ralph Hamers, bowing to pressure from politicians and the public.

Ralph Hamers, CEO of ING speaks during the presentation of the 2013 full-year results in Amsterdam, February 12, 2014. REUTERS/Toussaint Kluiters/United Photos

The company’s announcement last week that it would boost Hamers’ total pay package to just over 3 million euros ($3.7 million) triggered a firestorm of protest from politicians, who are facing national municipal elections next week, as well as reports of customers closing their accounts in protest.

“We as Supervisory Board are responsible for this proposal and regret the commotion caused by it,” Chairman Jeroen van der Veer said in a statement, adding the bank had “underestimated the public response” to the idea.

Finance Minister Wopke Hoekstra on Friday said the government was considering blocking the plan by any means necessary, including passing a law to change it if needed.

“This deals directly with the confidence we should be able to have in the banking sector,” Hoekstra said on Monday. “ING is not a cookie factory, it is a systematically important bank.”

Van der Veer, a former Shell CEO, had initially stood his ground against swelling criticism, arguing that Hamers has been underpaid for years.

Even after the increase, Hamers’ pay would have been below the average for heads of large banks and in line with packages for Dutch blue chip CEOs.

But the idea was met with disbelief among many voters, who recalled that the bank was bailed out by taxpayers during the 2008 global financial crisis, repaying the last of its aid in 2014.

The reaction among politicians was worse.

Parties representing 99 percent of the seats in parliament condemned the proposed wage increase, which instantly became a top issue ahead of municipal elections set for March 21.

Successive governments have tried to limit financial sector pay since the financial crisis, limiting performance bonuses, for example, to 20 percent of base salaries.

An attempt by the board of ABN Amro ABNd.AS to raise pay for executives in 2015 led to a delay of the company's re-privatization.

ING, which published its annual report and agenda for its annual meeting last week, must now wait until 2019 before proposing any new pay package for Hamers -- which shareholders must approve.

“To fulfill our duty to act in ING’s long-term interests the Supervisory Board will carefully assess how it can develop a sustainable and competitive remuneration policy going forward,” ING said.

($1 = 0.8114 euros)