The part-nationalised Royal Bank of Scotland is being propped up with £20bn (€22.8bn) of the UK's public money and is 68% owned by the British taxpayer.
It is likely to face public anger over its reported discussions about almost £1bn (€1.14bn) worth of bonuses with UK Financial Investments (UKFI), the body set up by the Treasury to manage the Government’s shareholdings in Britain’s troubled banks.
The retrenchment of the banking sector after years of excessive lending and big payouts has played a major part in tipping the economy into recession, fuelling resentment at the public money used in bail-outs and nationalisations.
On Thursday, Prime Minister Gordon Brown said any bonuses must reflect both the overall conditions in the economy and the performance of the bank.
Mr Brown told a Downing Street news conference that the top RBS executives had already left without severance pay while there were no bonuses being paid to board members and no dividends to shareholders.
But many bank staff below board level often earn significant bonuses.
Mr Brown said he agreed with US President Barack Obama that a new approach was required to reward senior banking executives, stressing there were “no rewards for failure”.
Mr Obama has proposed a $500,000 (€396,051) cap on payments to American bank executives who participated in the US bailout.
A Downing Street spokesman said the Government would only support any bonus payments to RBS staff through UKFI if they were consistent with the taxpayers’ interest.
Business Secretary Lord Mandelson added that RBS risked alienating the public by offering “exorbitant” bonuses to its traders and senior bankers.