Prime Minister David Cameron warned today that the Government could stop a proposed £500 million bonus payout for investment bankers at the largely state-owned RBS.
With the UK taxpayer owning 83% of the bank, Mr Cameron said that the Government would have a "very big influence" on the level of bonuses paid out by RBS this year.
Reports that RBS is planning to hand out as much as half a billion pounds, despite falling profits, have sparked widespread anger, following the £950 million the bank paid in bonuses last year.
The bank's pay pool, from which salaries and bonuses are paid, is understood to stand at £1.99 billion - only marginally lower than the £2.14 billion figure from 2010 and enough to provide bonuses of around £500 million.
But Mr Cameron today told BBC Radio 2's Jeremy Vine Show: "Let's be clear, that is not the agreed figure.
"The British Government is a major shareholder in RBS. That is a proposal I have read about in the newspapers, that's not agreed.
"We have a very big influence over it. We can stop the £500 million, absolutely."
Mr Cameron said he wanted "responsibility" both from the highest-paid bankers in the City and from those claiming benefits.
But he insisted he would not "go to war" on the bankers.
"We could spend the next six months having a war of words and a great big fight with the banks about everything," he said.
"I think that would be betraying our duty. Our duty is to settle this issue of the bank levy and the bonuses and then to get the banks lending.
"Because the real need in our economy is to get growth, to get jobs, to start up new businesses, to get businesses employing people, and you can't do that if your entire life is spent at war with the banks.
"The right side of the argument is the one that says 'Make sure there is responsibility, but at the same time get the banks lending' and that is what we are doing."