London - British Deputy Prime Minister Nick Clegg warned the country's banks on Friday that the government would not "stand idly by" if they paid out huge bonuses while failing to increase lending.
"They don't operate in a social vacuum," he told the Financial Times.
"The banks should not be under any illusion, this government cannot stand idly by," he said.
Clegg added that it was "wholly untenable to have millions of people making sacrifices in their living standards, only to see the banks getting away scot-free."
He stressed he wanted to end tensions between the banks and the government, which skyrocketed after the banks took much of the blame for the financial crisis.
But that would be impossible "unless we have a cathartic settlement where we see visible restraint from the banks and sensitivity to the context in which they operate," said the deputy premier.
Clegg's comments will be intended to appeal to his Liberal Democrats, in coalition government with the larger Conservatives, after a torrid time for his party in the fight to hike university tuition fees.
The Lib Dems' popularity has sunk to is lowest level for years amid the fees row, which saw the party back an enormous rise in university tuition charges in England despite a pre-election pledge to abolish them altogether.