Britain's deputy prime minister Nick Clegg said banks should show restraint when setting bonuses this year, hinting they could be hit by higher taxes if they do not.
"If the banks pay themselves unjustified bonuses, we reserve the right to take very serious action on that," Liberal Democrats leader Mr Clegg told BBC Radio 4 today.
"There are a number of options, the last government imposed a temporary tax on bonuses. I am not going to take any options off the table," said Mr Clegg.
The previous Labour government, defeated in an election in May, imposed a 50 per cent levy on bonuses of over £25,000 paid in the last financial year.
Some in the financial services industry have said London's finance industry could lose business if bankers were targeted.
Mr Clegg said banks propped up by the taxpayer during the credit crisis could not justify big bonuses at a time of sharp public spending cuts. "You cannot possibly award yourself ludicrous, sky-high bonuses in an industry that has been bailed out by the taxpayer when those same taxpayers are having to make very serious sacrifices in their own lives."
Britain has large stakes in Lloyds Banking Group and Royal Bank of Scotland after the previous government rescued them during the credit crisis.
Business secretary Vince Cable, also at the centre-left party's annual conference in Liverpool, has spoken of a "train crash" if excessive bonuses were paid.
Reuters