British finance minister Alistair Darling has sought to dampen speculation that beleaguered bank Lloyds TSB could be entirely nationalised after its share price plunged.
The state took a 43-per-cent stake in the bank amid the banking turmoil of last year, but Darling stressed on Saturday that the government believed banks are "best run in the commercial sector and privately owned".
A Sunday newspaper reported that Lloyds was planning to pay bonuses totalling £120 million (Dh635m), despite announcing that its HBOS subsidiary would make losses of £10 billion.
The Sunday Telegraph newspaper quoted unnamed "sources close to Lloyds" as saying the group was in talks over the payments with UK Financial Investments, the government-owned body which oversees the taxpayer's stake in the bank.
A spokesman for Lloyds refused to comment on the size of bonuses, but said the majority of staff work in its 3,000 retail branches and many typically receive bonuses of less than £1,000 in a year.
The Sunday Telegraph also quoted a government aide as saying full state control of the Lloyds group was "not under active consideration".
The value of Lloyds' shares plummeted by a third on Friday after it emerged that HBOS, the unit it took over last year, was heading for heavy losses.
The main opposition Conservatives have attacked the government, saying the Lloyds-HBOS merger was a "disaster" that should never have been allowed to take place.
News that the Royal Bank of Scotland (RBS), another bank bailed out by the government, is planning to hand out £1 billion in bonuses to staff led Prime Minister Gordon Brown to warn that "the short-term bonus culture in banks has got to end".