Scandal-hit Royal Bank of Scotland revealed staff bonuses of £607 million in 2012 despite losses of £5.2 billion after a "chastening" year.
The losses widened from £1.2 billion in 2011 after Libor rate fixing cost the bank £390 million in settlements. The bank has also revealed another £1.1 billion in provisions to cover mis-selling claims. Since the bank fell into difficulty in 2008, its losses have totalled almost £35bn
Despite the terrible figures Stephen Hester has said he believes RBS will be privatised "in the next couple of years".
He also spoke about the bank's desire to partially float its US business bank, Citizens, but not forat least another two years.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said this, along with the full year operating profit improving on 2011's figures, showed the bank had "some glimmers of hope".
"The capital cushion remains robust and the accompanying management comments indicated that 2013 may be the final year of such major transformation," he said.
"However, the net loss was brought about by an increase in its own debt and costs and provisions relating to Libor, PPI and interest swaps. The global banking industry remains under scrutiny, while at RBS the pressure to lend and the enforced sale of branches are unwelcome distractions."
The bonus pot was revealed as the chairman of the part public-owned bank said taxpayers may never get back the money used to rescue RBS.
RBS set aside a multi-million pound bonus pool - including £215m for investment bankers - but said it was recouping £302m for its Libor settlement by cutting the 2012 bonus pot, clawing back from previous years and reducing current year awards.
RBS chairman Sir Philip Hampton told ITV's Daybreak: "We will do our best to see if the taxpayers' money can be returned. but the bank was in a terrible mess, if you go back four or five years, it needed substantial re-capitalisation.
"Although we've had a difficult year I think we're on track for recovery. It will be for the government to decide when it sells its shares and how much they can get for them. Our job is to put the bank fully back on its feet."
Asked why RBS can afford to pay bonuses to its staff but not what the public spent in bailing it out, Sir Philip described the bonus situation as "toxic for everybody".
He said: "The bonus rates have been falling very substantially. Our bonuses now in our markets business, where all the big bonuses are, are 25%, a quarter of what they were four or five years ago."
He conceded bonuses were "still huge", but said "it is a very difficult, competitive marketplace, and if you don't pay what you need to pay you don't get the best people".
Sir Philip said bonus levels were "tough to swallow" for the pubic, but that levels are falling "slowly but surely".
He said RBS was trying to rebuild customer service and confidence, but that it couldn't be done over night.
Banker bonuses to be curbed from 2014
Separately, bankers across the city were cursing Brussels on Wednesday night after European officials voted to impose the strictest pay rules in the world on the banking sector, curbing future bonuses.
The deal, which will ban bonuses bigger than salaries from January 2014, is a blow to Britain which has lobbied against the rules insisting they will backfire.
But the UK won one concession: to allow shareholders to approve of higher bonuses through a vote.
"For the first time in the history of EU financial market regulation, we will cap bankers' bonuses," said Othmar Karas, the Austrian lawmaker who helped negotiate a deal.
"The essence is that from 2014, European banks will have to set aside more money to be more stable and concentrate on their core business, namely financing the real economy, that of small and medium-sized enterprises and jobs."
The deal still needs to be formally agreed - it needs the backing of a majority of EU states in order to be finalised.
However, city experts have said that any restriction on bonuses will do little to lower pay in the finance sector, where head-hunters say some annual packages in London approach £5m.
Alex Beidas, a pay specialist with the law firm Linklaters, told the Telegraph: "If the cap is implemented, it could result in significantly more complex pay structures within banks as they try to fall outside the restrictions to remain competitive globally."