LONDON (AP) — Royal Bank of Scotland PLC racked up the biggest corporate loss in British history last year, survived only thanks to tens of billions of pounds of taxpayers' money, and is axing thousands of jobs.

So how could the bank justify its plans to give executives bigger bonuses this year?

That question lies at the heart of the nation's heated debate about bankers' pay, which, with a national election looming, has become a political issue beyond mere financial reform.

RBS — which has come to symbolise the excesses of British capitalism after it was saved in the world's largest state-sponsored bank bailout — argues it needs to compete for high-priced talent if it is ever going to repay the government's investment.

In a circular sent to shareholders last week ahead of a meeting on December 15 in Edinburgh, RBS complained of "onerous" terms for participating in the government's toxic asset insurance scheme. Those include having to grant UK Financial Investments, the government agency which holds 70 percent of RBS shares, "the right to consent to the quantum and shape of the 2009 bonus pool".

Government officials, labour leaders and much of the public think the bankers still don't get it — still feel no shame about living high while steering their companies to the brink of collapse — and are now benefiting from the implicit guarantee that taxpayers will prop up the entire banking system.

The government is backing new requirements that banks disclose how many executives pocket more than £1 million ($1.7 billion) per year, and Prime Minister Gordon Brown said yesterday that would be part of upcoming legislation.

"I think most sensible people around the world would accept that if we come to a worldwide agreement about what the bonus structure should be, then every major bank in the world will want to follow that," Brown told a news conference.

Bankers' bonuses remain a politically sensitive issue in a country where the average wage is a bit more than £20,000 ($33,300) a year, unemployment is on the rise and a national election is due by June.

Treasury Minister Paul Myners told the House of Lords on Wednesday that the £1 million disclosure threshold would cover about 5,000 bank executives. "I think that that shows the extent to which the space that those in banking live in is completely different from the world that the rest of us occupy," Myners said.

It's a tricky position for the RBS board, with taxpayers holding 70 percent of the voting shares and 84 percent of the bank's economic value. The British Broadcasting Corp. reported that RBS board members were threatening to resign and had sought legal advice, but RBS denied that board members were consulting lawyers.

RBS hasn't put a figure on its intentions, but published reports suggest the bank is looking to set aside £1.5 billion ($2.5 billion) to be distributed as bonuses, up from nearly £1 billion a year ago.

"I think this confrontation has been a long time coming," says Vince Cable, an economist and senior lawmaker with the opposition Liberal Democrat party. "The bank is still operating as if it is a private bank in the good old days before it had to be rescued."

The government has invested £45.5 billion ($75.8 billion) in RBS shares to keep the bank solvent, and recently disclosed that it also pledged indemnities of £36.6 billion to tide the bank through the worst of the crisis.

That compares to $50 billion spent by the US government to support Citigroup.

British taxpayers are potentially up for even more covering losses from a government insurance programme for £282 billion of the bank's toxic assets.

But RBS is still perceived as one of the principal villains in the banking crisis.

As it reorganises, the bank has announced the elimination of 20,000 jobs, 14,000 of them in Britain.

Its former CEO Fred Goodwin, left with a pension of £703,000 per year after leading RBS on an expansion spree culminating in the disastrous takeover of the Dutch bank ABN Amro. Write-offs on that deal helped swell RBS' losses for 2008 to £24.1 billion, a UK record. Goodwin later agreed to scale back his pension to £342,500 per year, after collecting a lump sum payment of £2.8 million.