Royal Bank of Scotland (RBS) is to pay up to £250m in bonuses to its investment banking division, including to those implicated in the LIBOR-rigging scandal.
The state-owned bank expects to be fined up to £500m - including £100m by the Financial Services Authority.
Pat McFadden, Labour member of the Treasury committee, told the Financial Times there would be "enormous anger if UK taxpayers pick up the tab for the individual sins of traders who were trying to rig LIBOR rates".
RBS expects to recoup between £100m to £150m of the fine from the bonus pool, that will be a third lower than last year's £390m total.
Executives are also looking to claw back deferred bonuses from previous years worth tens of billions of pounds, the paper reported.
A senior official at the Bank of England recently argued bonuses should be deferred for up to ten years, rather than the three to five currently required.
"Three to five years is far too short to capture the cycle in credit," said Andy Haldane, the bank's financial stability director. "We had roughly a 20-year boom in the run-up to this crisis, so measuring performance only over a three or five-year window is far too short."
Duo start roles on 1 October
Where true value lies
Economy to thrive despite global risks
Behaviours, animals or something else?