Royal Bank of Scotland (RBS.L) has received approval from Treasury agency UK Financial Investments to pay about 550 million pounds ($920 million) in staff bonuses for 2013, Sky News reported late on Tuesday.
The news service said the bank is expected to disclose the proposed bonuses when it announces its annual earnings, estimated at a loss of about 8 billion pounds.
The bank's Chief Executive Officer, Ross McEwan, is also expected on Thursday to unveil a strategic review of its investment banking and international operations in which the group could shed up to a quarter of its 120,000-member workforce, according to sources who spoke to Reuters.
The partially nationalized bank is expected to have reduced the 2013 bonus pool by at least 25 million pounds under a commitment it gave 12 months ago to reduce bonuses in subsequent years, Sky said.
British Prime Minister David Cameron last month promised that the government would use its veto power as an 81-percent shareholder in RBS to block any rise in overall pay at RBS's investment bank.
Bankers' pay leapt into British political focus ahead of the annual financial sector bonus season, when the opposition Labour party called on the government to block any attempt by RBS to pay its top staff bonuses worth twice their salary.
Under new European Union rules - which are being challenged by Britain in EU's top court - banker bonuses can be no higher than an individual's fixed salary, rising to double that level if shareholder approval is obtained.
Bonus payments remain a sensitive issue as many Britons still blame banks for the 2008 financial crisis, after which the state was forced to bail out RBS and Lloyds (LLOY.L).
Earlier this month Barclays (BARC.L) prompted an angry reaction from politicians and labour unions after it increased its bonuses by 13 percent to 2.4 billion pounds, even as it announced plans to axe 12,000 jobs.
RBS and UKFI could not be reached for comment outside of normal business hours.
($1 = 0.5994 British pounds)
(Reporting by Aashika Jain in Bangalore; Editing by Ken Wills)