Mandelson warns bank over bonuses

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The troubled bank - which is being propped up with £20 billion of public money - was preparing to make payouts to thousands of the firm's senior staff, according to The Times newspaper.

Lord Mandelson said: "What I would say is please be mindful about how this looks and what public opinion will be."

Lord Mandelson said the bank must strike a balancing act between keeping its best staff while considering public opinion.

He added: "Obviously you have to work in a market where you have got to recruit the best people, keep the best people in place and motivate them. But they have also got to consider how it looks and how it seems when those mistakes and losses have been made."

He said some of the reported bonuses could be perceived as "exorbitant" by people around the country.

RBS's investment banking division paid £1.83 billion in salary during 2007 - mostly in bonuses - and while payments for last year would be smaller, they would be made, according to The Times.

After being asked about the proposed bonuses, a spokeswoman for the bank said: "No decisions have been taken yet."

Lord Mandelson was speaking at the launch of a £3 billion cash injection involving RBS for small businesses. The NatWest parent said it would make the funding available to small and medium-sized enterprises (SMEs) through 12 regional funds.

RBS, now 68% owned by the Government, is due to report its 2008 results in three weeks, when it will confirm a loss of several billion pounds.