It has been reported the board members were legally advised to resign if plans from the government to have the right to veto bonuses went through.
The state-rescued lender, which is 70 per cent owned by the taxpayer, said it would struggle to hire and retain staff if the government took control of its payouts, adding that this would make it at a 'significant competitive disadvantage'.
In response to the news, business secretary Lord Mandelson said: 'I understand the point that RBS directors are expressing - they say they have to remain competitive in the market in recruiting senior executives, and this is why it's important that all the banks are equally restrained, and RBS is not singled out.'
The news of the walkout threat came as city minister Lord Myners estimated at least 5,000 bankers in the UK would earn more than £1m this year.
Lord Myners, speaking in the House of Lords on Wednesday, said: 'I would estimate that at least 5,000 people working in the banking industry in the UK will receive, if nothing is done, remuneration in excess of £1 million this year.
'I think the real responsibility here must lie with the shareholders.'
Last year, RBS paid £900m of bonuses in its investment arm and it wants to raise this amount to about £1.5bn. It is understood that its board of directors has sought legal advice about whether they can resign in protest at the Treasury taking control of its bonus pool.
Liberal Democrats treasury spokesperson, Vince Cable said: 'I would welcome their resignations, as the bank cannot hold the taxpayer to ransom.
'As a state run bank, the government must finally take control and ensure that both its pay and lending practices are in the public interest.'
The state-rescued lender, which is 70 per cent owned by the taxpayer, said it would struggle to hire and retain staff if the government took control of its payouts, adding that this would make it at a 'significant competitive disadvantage'.
In response to the news, business secretary Lord Mandelson said: 'I understand the point that RBS directors are expressing - they say they have to remain competitive in the market in recruiting senior executives, and this is why it's important that all the banks are equally restrained, and RBS is not singled out.'
The news of the walkout threat came as city minister Lord Myners estimated at least 5,000 bankers in the UK would earn more than £1m this year.
Lord Myners, speaking in the House of Lords on Wednesday, said: 'I would estimate that at least 5,000 people working in the banking industry in the UK will receive, if nothing is done, remuneration in excess of £1 million this year.
'I think the real responsibility here must lie with the shareholders.'
Last year, RBS paid £900m of bonuses in its investment arm and it wants to raise this amount to about £1.5bn. It is understood that its board of directors has sought legal advice about whether they can resign in protest at the Treasury taking control of its bonus pool.
Liberal Democrats treasury spokesperson, Vince Cable said: 'I would welcome their resignations, as the bank cannot hold the taxpayer to ransom.
'As a state run bank, the government must finally take control and ensure that both its pay and lending practices are in the public interest.'
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