Royal Bank of Scotland, now 68 percent owned by the UK government, still plans on paying out bonuses that could reach tens of million to hundreds of millions of pounds, London newspaper The Times reported Wednesday.
Some high-flying employees could still get six-figure bonuses, according to the paper.
UK Financial Investments, which owns the government stake in the troubled bank, has agreed in principle to limited payouts, the paper said.
But new RBS CEO Stephen Hester is very aware of the sensitivity of the issue and may decide to pay out all bonuses in shares or set a cap on payments, the Times reported.
Discussions "on possible approaches to renumerations" are ongoing and no decision has yet been taken, representatives of the government and of RBS told Reuters.
Some parts of the bank's investment banking arm, such as foreign exchange, bonds and commodities trading, made large profits last year, according to the paper.
On Wednesday, President Barack Obama imposed tough new rules to rein in corporate pay, capping executive compensation at $500,000 a year for companies receiving taxpayer funds and limiting lavish severance packages paid to top officials.
A statement from RBS on bonuses is expected on Feb. 26.