The Government has stamped a limit on bonuses for staff at the Royal Bank of Scotland (RBS) and outlawed cash payments altogether, the Chancellor has confirmed.
Total bonuses will be cut to £340m in 2009 - from £2.5bn last year - and be paid in shares only, Alistair Darling said.
"We want to see a cultural change where short-term bonuses are replaced with incentives for the long term," he said.
Darling said the bank will pay the minimum it legally can, referring to the fact some employees have bonus payments written into their contracts.
The bailed-out bank, which paid staff $2.6bn in bonuses in 2007, was this week dubbed "reckless" after spending £200m on celebrity figureheads.
The bank's former chief executive Sir Fred Goodwin signed multi-year contracts with public figures including the Queen's granddaughter Zara Phillips and golfing legend Jack Nicklaus.
Last month the bank posted a loss of £28bn for 2008.IFAonline
IA sectors – help or hindrance?
Despite multiple complaints
Annuity market worth £4bn in 2017
For ‘distress’ caused