Part-nationalised Royal Bank of Scotland has been intensifying pressure on the government for allowing it to pay bonuses, saying these bonuses are vital for keeping it competitive in the market.

The RBS said it lost more than 1000 investment bankers to rivals as Government tightens up on bonuses.

Speaking on the issue, a source at the RBS said, “It's no secret that we have already suffered losses.”

Tensions are widening between the Government and banks over the issue of huge bonuses as government has plans to introduce windfall tax on huge bonuses.

The RBS added that it would suffer mass exodus and left with inferior staff in case the Treasury prevents it from paying bonuses.

Last week, directors of the RBS threatened the government, saying they would quit in case the Treasury blocks their plan to pay out around 1.5 billion pounds in bonuses.