British Deputy Prime Minister Nick Clegg has warned the banks that the government would not 'stand idly by' if they failed to rein in lavish bonuses.
He called for 'visible restraint' in the forthcoming bonus round and indicated he was determined the coalition would step in if necessary.
In an interview with the Financial Times, he said: 'They don't operate in a social vacuum. The banks should not be under any illusion, this Government cannot stand idly by'.
'It is wholly untenable to have millions of people making sacrifices in their living standards, only to see the banks getting away scot-free,' he added.
He made clear that he did not intend to fight shy of taking on the banks, even if that meant undermining efforts to ease tensions between them and the Government.
Asked what sanctions the Government might apply to bankers if they ignored Mr Clegg's warning, Prime Minister David Cameron's spokesman said: 'Clearly, we all want to see pay restraint'.
'The Government's position is that we want to ensure that banks pay a fair share. The Chancellor set out the position in the Spending Review that we want to ensure that we have the maximum sustainable tax take from the banks,' the spokesman added.
Britain is also introducing a bank levy in January - the first country to do so - and there are new rules coming in this year.
'The Financial Services Authority are publishing an updated code on remuneration today setting out the rules governing banks and bonuses for the coming period. We are having to impose pay restraint in the public sector as part of our strategy to deal with the deficit, and we want to see restraint in the financial sector too,' the spokesman said.
