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".
More top news
A man has claimed he robbed a bank to fund cancer treatment for his young daughter who suffers from a rare from of eye cancer.
Presenter Sue Perkins took the Culture Secretary to task over BBC cuts after ambushing him as he ate his dinner.
War veteran Paul Royle died at a Perth hospital on Sunday following surgery on a hip fracture.