The government has insisted it did not force the Royal Bank of Scotland to get rid of chief executive Stephen Hester, who surprised markets with his resignation yesterday afternoon.
Treasury minister Sajid Javid told the Commons the decision was made "jointly" by the RBS board and Hester.
"The chancellor has not been directly involved in meeting with Hester," he told MPs. "He has not met with Hester prior to his departure on this issue."
Javid said the chairman of RBS, Sir Philip Hampton, did meet with George Osborne last week to "inform the chancellor of the board's decision".
He added: "Of course when RBS makes a big major decision they will inform the government."
The government owns 81% of RBS - after it was forced to bailout the flailing bank at the height of the financial crisis.
And Labour MP Barry Sheerman told Javid: "You've just sacked this banker for your own purposes."
On Thursday morning Downing Street also insisted the decision for Hester to stand down was a matter for the RBS board.
The prime minister's official spokesman acknowledged that the government was represented in discussions on the long-term future of the bank through UKFI, the body set up to manage its shareholdings in the bailed-out banks.
"This is a decision of the board of RBS," the spokesman said. "Boards, as you would expect, discuss future strategic planning and succession planning with their shareholders. Through UKFI, the Government is a very major shareholder. UKFI was involved in the discussion in the way you would expect."
Last night former Labour City minister Lord Myners claimed that pressure from the government on Hester had made his position "close to impossible".
He told BBC2's Newsnight: "He's made it very clear he didn't really want to go now. He's going because the board has said he should go and I think they are doing the bidding of George Osborne.
"George Osborne has been increasingly at odds with Stephen Hester over the management of this bank."
Speaking on BBC Radio 4's Today programme this morning, Hester insisted he had not been "prised out" of the bank.
"In the end I feel it was a persuasive argument that while of course I was ready to take the bank through privatisation, for me that would have been the end of a journey. If the bank can attract a good CEO for whom it is the beginning of the journey that is the best way around," he said.
RBS confirmed plans for the loss of 2,000 investment banking jobs today as its shares tumbled on the back of Hester's surprise exit.