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HBOS has cut bonuses for its top brass for 2007, but may have made it easier for them to earn payouts in 2008.

In its annual report for 2007, the bank admitted that its growth had slowed, and said it had slashed short-term cash bonuses for its executives from 69% in 2006 to 46% last year. It also revealed that it would not be paying anything out from its long-term incentive plan.

Karen Jones, the non-executive director who chairs the numeration committee, pinned the cuts on the dislocation in the UK markets spurred by the credit crunch. Though the bank wrote-down a comparatively tiny £227m in sub-prime losses, its operating profits fell from £5.7bn in 2006, to £5.47bn last year.

The good news for HBOS directors is that they may find it easier to earn bonuses based on the long-term incentive plan in 2008 – the group is halving the shareholder return threshold at which long-term bonuses are paid out.

Jones says the incentive plan “reflects the challenge of setting robust long-term performance targets in the current turbulent markets.”

An HBOS spokesperson denies that the more lenient targets are offering an easy ride: “These targets are just as stretching as before. They simply recognise that earnings growth will be more modest.”

Andy Hornby, the chief exec of HBOS, received a total comp of £1.9m, in comparison to £1.6m last year.

This compares with Aberdeen Asset Management, whose chief executive Martin Gilbert pulled in a massive £2.6m bonus last year.

Meanwhile, Royal Bank of Scotland has promised to pay 100,000 staff a bonus of least 10% of their salary out of a total bonus pot of £250m