Deputy Prime Minister Nick Clegg has warned taxpayer-owned Royal Bank of Scotland that it "shouldn't be dishing out ever larger amounts of money in pay and bonuses" as it announced pre-tax losses for 2013 of £8.2bn and a reduced bonus pot of £576m.
During 2013, the focus on the question of potential Scottish independence from the UK has heightened and the Scottish government will be holding a referendum in September 2014.
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Royal Bank of Scotland boss Ross McEwan has admitted that bonuses were a "highly emotional issue", but avoided questions on whether sums could be clawed back from those who underestimated the difficulties.
I understand it is a highly emotional issue to see bonuses paid in which we are still losing money.
The issue for me as a pragmatic executive is that I need to be able to pay what it takes to actually get people to do the job for us.
When you look at RBS, we of all banks have been the one who have been pulling the pay and bonus structures down, but I do need to be in the market to get people to do these jobs.
– RBS chief executive Ross McEwan
But he warned that his best staff were constantly being "tapped on the shoulder" by other institutions.
He said: "We do see the turnover of good people and I have got to say they are in demand."
Mr McEwan insisted that "no decisions" had been taken over whether the bank would pay packages that would breach the EU's cap on bonuses of 200% of salary.
The Royal Bank of Scotland boss has said that the depth of problems at the bank was still coming as a "shock".
Speaking to Radio 4's Today programme chief executive Ross McEwan said: "I think that people, including executives at the bank, did not realise how big a change process we had to go through to get this bank back into shape."It has been a real shock how much time it is taking to turn it round."
Nick Clegg has told Daybreak a loss-making bank such as the Royal Bank of Scotland "shouldn't be dishing out ever larger amounts in pay and bonuses".
Although the Deputy Prime Minister acknowledged the average amount of bonuses paid out by taxpayer-funded banks has been coming it down, he stressed: "It needs to continue to come down".
Mr Clegg said: "They are entitled to pay their staff what they want when they are standing on their own two feet - at the moment they are not.
"I actually said this to the chairman of NatWest bank recently - as long as you are there because the British public have been generous to keep you in existence, be restrained, be sensible, be responsible".