The outgoing chief executive of taxpayer-backed Lloyds Banking Group is poised to receive a bonus of around £2 million, it was reported today.
Eric Daniels is set to be awarded the windfall by the Lloyds board in this year's controversial bank bonus round, according to the BBC.
The bank boss, who leaves Lloyds in March, is entitled to a £2.3 million maximum bonus, set at 225% of salary.
He has waived his bonuses for two years in a row, but any payout is likely to fuel mounting anger over bank handouts as reports suggest the industry is preparing to fork out a bumper £7 billion in bonuses.
The BBC said sources close to Lloyds, which is 41% owned by the taxpayer, believe Mr Daniels will not turn down this year's bonus after returning the bank to profit in 2010.
Lloyds declined to comment.
However, the Government is under pressure to enforce restraint on lavish banker bonuses this year - particularly within state-owned Lloyds and Royal Bank of Scotland.
Barclays boss Bob Diamond fanned the flames over bonuses yesterday when he told MPs on the Treasury Select Committee that the time for "apologies and remorse" was over and refused to be drawn on his bonus or payouts to staff.
The Prime Minister is facing claims that the Government has surrendered to the City after failing in its efforts to see banks commit to smaller bonuses and pledge higher levels of business lending.
It has been locked in talks with the industry to reach agreement on "acceptable" bonus levels since before Christmas.
But there are concerns that the industry is planning a return to mammoth bonuses after two years of limited handouts and last year's bonus tax.
There are suggestions that banks feel efforts to rein in pay since the crisis have not been recognised by the public and politicians.
Lloyds clawed its way back into profit in 2010 with a £1.6 billion surplus at the half-year stage, having suffered billions of losses amid the financial crisis.
Mr Daniels presided over its ill-fated deal to buy Halifax Bank of Scotland at the height of the meltdown.
Last year, he decided to forgo a £2.3 million bonus after the board said he was entitled to the maximum handout, despite the bank reporting losses in 2009 of £6.3 billion.
He is to be replaced at the helm by former Santander UK boss Antonio Horta-Osorio.
A Cabinet minister expressed concern about Mr Daniels' reported bonus payment.
Transport Secretary Philip Hammond told BBC Radio 4's The World at One: "It is not welcome news. We have made it very clear that we expect the taxpayer-controlled banks to show restraint."
Downing Street said UK Financial Investments (UKFI), which manages the Government's shareholdings in the banks, had not received any proposals about bonuses from either Lloyds or RBS.
"UKFI have not received any proposals from Lloyds, so it sounds like speculation to me," the Prime Minister's spokesman said.
Asked whether a £2 million bonus would be acceptable, he added: "It's a hypothetical question, but let's wait and see.
"There is a process. UKFI speaks to Lloyds, UKFI speaks to RBS, but as I understand it from the Treasury, as of earlier today they had not received any proposals."