Royal Bank of Scotland Group, which is 84 per cent owned by the government, said its net loss narrowed and will pay investment bankers £2.93bn in salaries, bonuses and benefits, of which £1.6 billion is for bonuses.

The losses narrowed to 3.6 billion pounds ($5.5 billion) for 2009 from 24.3 billion pounds a year earlier, CEO Stephen Hester told reporters and added that the bank will return to profitability only in 2011. Writedowns increased to a whopping 13.9 billion pounds, but "appear likely to have peaked," the Edinburg based lender said. The stock reacted positively to news and jumped 8.6 per cent as the announcement.

CEO Stephen Hester will forgo his own bonus of up to £1.6 million over public anger over such payments. The move echoes move by Bob Diamond and John Varley, senior executive at Barclays, despite Barclay's not taking any direct government aid.

RBS, which needed 45.5 billion pounds in taxpayer-funded support, recent sold its stake in RBS Sempra commodities to JP Morgan for $1.7 billion.