Public right to expect bankers' bonuses to be cut says Cable

It is estimated banks will pay out a total of 7 billion in bonuses for this year but banks could reportedly be pressured to cut this by nearly half to 4 billion.

Mr Cable said: "In these challenging times, millions of workers across the public and private sectors are working out how to do more for less and often undergoing pay freezes.

"Banks have been significant recipients of public generosity in the past few years. In return, it is quite reasonable to have high expectations of the way they conduct business and that they are encouraged to show restraint in how they reward themselves during this difficult time."

John Cridland, the newly appointed director general at the Confederation of British Industry, added that bankers should be able to show they have earned their windfalls. He said: "The important part about executive remuneration and bonuses is that shareholders and other stakeholders can see that it is earned."

Richard Lambert, the outgoing head of the CBI, also said bankers would seem "arrogant and out of touch" if they carried on paying bonuses while the public sector wrestled with swingeing cuts.

The British Bankers' Association (BBA) played down reports it had hosted meetings with the banks to discuss pay rewards.

But a spokesman said banks would take into account public perception when calculating their bonuses.

"A bonus awarded in the UK has to be against strict targets approved by the FSA, with the majority locked away for a number of years and mostly paid in shares, not cash.

"UK banks are also well aware of the public view and will take this into account when bonuses are decided.

"Right now, speculation about the size and the issue of bonuses is just that - speculation."