Pay for investment bankers at Barclays bank will be lower this year but the actual level has yet to be set, Chief Executive Bob Diamond said in an interview published in Saturday's Times newspaper.
Large bank bonuses remain a hot political issue following the 2008/9 financial crisis and Britain's bailout of leading banks.
The government, which struck a deal with British banks earlier this year to rein in pay and lend more, this week sought greater transparency by proposing banks publish the reward packages for more of their best-paid employees.
We have to find a balance between being responsible and being competitive. I can't just determine the compensation with no reference to what people earn at other institutions, Diamond said.
On the other hand we have to recognise that there is concern about compensation, he added.
I think the environment was difficult this year and in that environment you will see compensation levels come down.
Diamond rejected as completely speculative a report last weekend that Barclays was preparing to pay its investment bankers 5 billion pounds ($7.8 billion) this year.
I have not even made a proposal to the remuneration committee, he said.
Barclays was already working on plans to ring-fence its retail and investment divisions, ahead of the government's expected endorsement of reforms to make banks safer, Diamond said.
The proposals from the Independent Commission on Banking could cost banks up to 7 billion pounds a year, mainly due to higher funding costs, and Barclays is expected to be one of the hardest hit.
Ring-fencing would not have been my first choice. It's going to add costs to banking but we can live with it. It's a done deal and now we're moving into execution, he said.
He said there were no plans for the bank to leave Britain to escape the new regulations.
We've been here 320 years. We have not spoken to a single regulator in any country anywhere in the world, including here, about leaving the UK. This is our home, he said.
He indicated support for British Prime Minister David Cameron's veto of a European Union treaty change at this week's summit after failing to get safeguards he had sought for London's financial services sector.
Financial services are very important for the UK and it's reassuring to see the prime minister demonstrating so clearly that he recognises that,' he said.
(Reporting by Tim Castle; Editing by Gary Hill)