The bankers recruited by the Treasury to manage the Government’s £37 billion stake in the high-street banks are themselves in line for bonuses, The Times has learnt.

The admission will undermine the Chancellor’s attempts to contain the growing row over performance-related pay to lenders rescued with taxpayers’ cash.

UK Financial Investments Ltd (UKFI), the Treasury-run body created by Alistair Darling to manage the state’s stake in the banks, is set to approve more than £1 billion in bonuses for bankers bailed out by the taxpayer. The Royal Bank of Scotland, which is 70 per cent owned by the state, wants to pay staff close to £1 billion in bonuses. UKFI is also being asked to approve bonus payments in another part-nationalised lender, Lloyds Banking Group.

Mr Darling acknowledged public anger over bonuses yesterday and announced a review into the way banks are run. But he said there was “nothing wrong with a bonus scheme that rewards success”.

George Osborne, the Shadow Chancellor, called for a fundamental change to bankers’ pay. “The party is over for the banks. You can’t go on paying yourselves 20 times what a heart surgeon earns. That whole culture has to come to an end. I think the bankers, and indeed the Government, have to understand you can’t just reflate the balloon that burst,” he said.

The row has thrown the spotlight on to the arm’s-length body set up last November that must now decide how much banks can pay out in bonuses.

Since its creation UKFI has hired around a dozen senior bankers and other financial experts.

They include John Kingman, a senior Treasury official, John Crompton, formerly managing director of Merrill Lynch, and the banking analyst Tim Sykes. The Government has so far refused to say what UKFI’s staff are paid, but a spokesman yesterday admitted it intends to run a bonus scheme. The full details had yet to be finalised, he said.

Sources close to UKFI defended the proposed incentive payments. “If these guys sell RBS at a large profit for the taxpayer in a couple of years, who’s going to begrudge them a bonus?” said one.

Mr Darling was yesterday forced to defend Glen Moreno, UKFI acting chairman, after it was reported that he was a former trustee of Liechtenstein Global Trust, which has been at the centre of an international investigation into alleged tax evasion.

Barclays, which has taken advantage of government bailout schemes but has not accepted rescue capital from taxpayers, will today announce that bonuses for 2008 will be down by about half on average. Barclays Capital, its investment banking arm, is expected to pay out £600 million, while there will be additional bonuses for people in the retail and commercial arm of the bank.

French banks yesterday agreed a code of ethics to limit bonuses and peg them to long-term success rather than short-term profits. The code, the first of its kind in the world, comes after President Sarkozy blamed bankers for the global economic catastrophe.

UKFI staff will not be the first state bankers to be paid incentive payments. Bonuses worth 10 per cent of salaries were paid to Northern Rock staff last month because the lender hit targets to repay loans.

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