State-controlled Royal Bank of Scotland said reports it was due to pay chief executive Stephen Hester a bonus of more than 1 million pounds were inaccurate and premature.
RBS said Thursday it had made no decision on his pay after the Financial Times reported chairman Philip Hampton and the board were pressing ahead with a payout to Hester of between 1.3 million and 1.5 million pounds for 2011.
The award would come on top of a 1.2-million pound salary.
The bonus would likely inflame political wrangling over bankers' salaries, which the government has vowed to clamp down on. At RBS in particular, bonuses have been a thorny issue since the bank was bailed out by taxpayers in 2008.
The bank's share price has almost halved in a year, and RBS has recently taken the axe to big chunks of its investment bank, cutting thousands of jobs as it exits certain business lines, making this year's bonus season even tougher.
The reports in the media this morning are both inaccurate and premature. Neither the remuneration committee nor the board has discussed the position on the bonus for our CEO for 2011 at this stage. Any suggestion to the contrary is therefore untrue, Hampton said in a statement.
RBS investment bank head John Hourican could also be in line for a multi-million pound payout, based on bonus awards from several years ago and falling due now.
Insiders at RBS were urging Hester to accept his bonus for 2011, the FT said.
Antonio Horta-Osorio, CEO of Lloyds Banking Group, which is also part government-owned, last week said he would waive his bonus after taking two months off to recover from fatigue. His reward could have been worth 2.4 million pounds.
(Reporting by Sarah White; Editing by David Hulmes)