ULSTER BANK said yesterday that no decision had been made on the payment of 2008 bonuses to staff in Ireland.

This followed reports in the British press that its parent Royal Bank of Scotland (RBS) was planning to pay £1 billion in staff bonuses in the coming week, just months after being bailed out by the UK government.

RBS’s plan to pay bonuses caused fury in Britain, where the taxpayer has provided a £20 billion bailout.

British chancellor Alistair Darling revealed yesterday that while he has told RBS that failure should not be rewarded with huge bonuses, he could not rule out payments for some staff.

The bonuses are expected to be a mix of cash and shares. It was reported that RBS believes it is contractually obliged to pay about £500 million in bonuses, with the balance discretionary.

A spokeswoman for Ulster Bank, which is planning to lay off 750 staff in Ireland, was unable to say when a decision on bonuses would be made by the bank.

Meanwhile, AIB and Bank of Ireland are reported to have told the Government that they are contractually obliged to pay bonuses to some senior executives, managers and traders.

This emerged from talks in recent weeks on a €7 billion recapitalisation of the banks by the State, which is expected to be announced by the Government on Tuesday.

A report in the Sunday Tribunesaid the banks had told the Government that contractual issues meant that a large number of staff must be paid their bonuses .

Irish Life Permanent (ILP), which is not due to receive any funds from the Government’s recapitalisation initiative, has cancelled 2008 bonuses for 160 of its most senior managers and executives. It has also frozen their pay.

This will affect the bank’s top brass, including chief executive Denis Casey, finance chief Peter Fitzpatrick and Kevin Murphy, who heads the Irish Life business.

Bonuses due to other staff at ILP are being cut by 75 per cent.

It is understood that ILP plans to hold talks with its trade unions, Unite and Siptu, to discuss a pay freeze for all staff this year.

This move is likely to be resisted by the unions, especially as ILP was recently highlighted by stockbroker Davy as being the only Irish bank likely to make a profit in the next two years.

National Irish Bank, which is owned by Denmark’s Danske Bank, last week froze pay after producing a poor set of financial results.

NIB said last week that a steep rise in loan impairments for 2008 and the writedown of all goodwill remaining from its acquisition by Danske Bank were responsible for a pretax loss of €552 million.

Minister for the Environment and Green Party leader John Gormley yesterday said that executive pay for bank executives would have to be trimmed substantially to assuage public anger over the recapitalisation.

“The levels of pay for bank executives is quite simply unsustainable in the current [economic] climate,” Mr Gormley told RTÉ.

Taoiseach Brian Cowen last week said that banks receiving funds from the State should cut executive remuneration levels by 25 per cent.