Prime Minister David Cameron said that he was still talking to banks about their bonuses and that big payouts at state-backed lenders were not a "done deal."
Asked about reports of a £2.5m payout for Royal Bank of Scotland chief executive Stephen Hester, Cameron said: "It isn't a done deal ... You will have to wait and see."
The government is urging banks to curb bonus payments to quell public anger about harsh spending cuts imposed after the bailout of banks contributed to a record peacetime budget deficit.
"We are having detailed discussions with Barclays with the other major clearing banks to try and get a settlement of this whole issue.
"Let me tell you what I want. I want the bonus pools to be lower, I want the taxes that the banks pay to be higher and, vitally, I want the lending that they do to do business, particularly small business in our economy, to increase," Cameron said.
Cameron made a distinction on bonuses between those banks the government controlled or had a stake in, such as Lloyd's Banking Group and RBS, and others such as Barclays which the government could do little to influence.
"In a matter of weeks ... you will be able to see both what is going to happen at, effectively, state-owned banks, where I absolutely believe they should not be the front-markers on bonus payments they will be the backmarkers," Cameron said.
He said those banks would be "limited" in what kind of bonuses they would be able to award. "We will want to agree with them on what is acceptable," Cameron said, without explicitly saying the government would impose specific bonuses.
Banks are expected to award £7bn of bonuses in coming weeks, stoking resentment among Britons facing pay freezes or below-inflation pay rises, and embarrassing the government as its austerity measures begin to take hold.
City A.M. Reporter