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The firm responsible for managing the Government's stake in Royal Bank of Scotland will vote down any resolution proposing bonuses of 200% of fixed pay, the part-nationalised bank has announced.
RBS said UK Financial Investments informed the bank of its opposition to a 2:1 variable-to-fixed pay ratio - which it described as the "sector norm" - and therefore the board will not bring the proposal before its annual general meeting.
"The board acknowledges that this outcome creates a commercial and prudential risk," it added.
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The Government's decision to block Royal Bank of Scotland's bonus plans makes it abundantly clear the troubled bank still has much to do.