The Royal Bank of Scotland, after a fierce row with the Treasury over the issue, has hinted that it might succumb to the increasing pressure and actually cut down on its executive bonuses, which the authorities feel are quite high.

The partly state owned bank, which had to give the Government the power to control and govern its bonus pot, as it entered into a scheme to insure its "toxic assets", it seems wants to cool off some of the high tension that has emerged as a result of the level of bonuses it has been able to pay.

Speculations are that RBS insiders have said that the payouts would now be "at the low, low end of the scale", even if it meant "losing experienced staff to better-paying rivals". Directors of the bank, it has been reported, could threaten to walk off if the Treasury used its power over the bonuses "to impose a cap" on the reward payouts.

On its part, the Government has warned that if nothing is done by the bank on its own, the authorities would veto the size of the RBS bonuses for the year 2009. It is believed that despite the bank struggling to keep up in the difficult financial times, the bonus payouts increased by nearly 50% compared to last year's 1.5 Billion Pounds figure.

RBS is 84% Government owned.