UK Treasury minister, Mark Hoban, has called on banks to exercise restraint in paying bonuses when the public and private sectors are under pressure to cut labour costs. Addressing the British Bankers Association’s annual dinner at London’s Mansion House, Mr Hoban said banks needed to show they operated in a "fair and stable" way in allocating bonuses this year. He also confirmed the government was looking at ways to tax banks' profits.

"We have the opportunity to send a clear message to the public that the banking system now operates in a way that is fair and stable and no longer rewards employees based on short-term performance whilst leaving investors and taxpayers exposed to the long-term risks," said Mr Hoban, who was appointed to his role as financial secretary to the Treasury May 2010, adding: “By visibly reforming the way they operate, banks can show they exist to serve the whole economy, not just their own interests. By grasping the opportunity for reform, the banking sector can start a new chapter, one based on principles of transparency, resilience and stability."

In May, the new coalition government announced that it planned to introduce a tax on banks and measures to tackle "unacceptable" bank bonuses. These plans are part a wider move by governments across the world to rein in large bonuses paid to bankers - bonuses that, critics argue, promoted the kind of short-term risk taking that contributed to the financial crisis.

Angela Knight, Chief Executive, British Bankers' Association, said she believed bankers were being “treated like lepers and carriers of bird flu!” She insisted that as far as the bonus issues were concerned, “the whole question of pay was put into regulation last year. The only country of the G20 to do it was here in Britain. Rather than play the blame game,” continued Ms Knight, saying it was something that the government had already agreed, “we have to work together. There’s no point in saying we’re just going to change the regulation of banks when there’s two or three other very important factors of fiscal and monetary policy – and indeed the global interconnection – if these aren’t addressed as well.”