The furore over bonus payments to bankers is expected to reach fever pitch in the coming weeks as major investment banks announce their bonus payouts which analysts estimate could total €60bn. Although little detail on individual payments is expected, the City will be full of anecdotal figures of some of the staggering bonuses paid to top performers.

The announcement in mid-December by the UK government that there would be a 50% windfall tax on bonuses above £25,000 is now expected to have little impact.

Alastair Darling's attempt to recoup some of the cost to the UK taxpayer of the global financial crisis was met with anger from within the Square Mile as senior executives said it would result in many bankers relocating to other financial centres, thus weakening London's position as one of the leading international financial centres.

Irish banks Allied Irish Bank (AIB) and Bank of Ireland (BOI) both have operations in the UK which would be subjected to the new tax. Just a week ago, a member of AIB senior management was in London briefing staff on the bank's performance.

According to one senior staffer at the briefing, the new tax is not a concern as the Irish executive confirmed that no discretionary bonuses will be paid for 2009. However, it is understood that some contractual bonuses may well have to be.

AIB has only recently paid its 2008 bonuses. It made the payments towards the end of 2009 as staff in the US threatened to sue when the bank decided not to pay already announced bonuses. A spokeswoman for BOI said it does not intend to pay discretionary bonuses to any UK staff. However, staff at some of its better performing divisions are rumoured to be receiving previously contracted bonuses.

Early in the new year it became clear that many banks planned to bear the cost of the tax rather than passing it on to staff. Deutsche Bank was one of the first to announce that it would spread the cost of the tax on bank bonuses among its entire global staff. Chief executive Josef Ackermann said it would be unfair to treat UK bankers differently to the rest of its staff.

International recruitment consultants Tiglon Partners compiled a report on the major international investment bank's expected compensation and bonus packages for 2009/10. It said that there are "signs of a strong shift to more of a multi-year payout model". It expects most investment banks will cap cash compensation this year and top executives will find that their cash payments may drop as "stock options increasingly become the main component of year-end packages for top executives, with substantial deferral and clawbacks in place".

According to the report, Barclays is expected to defer 75%-80% of this year's bonus and the deferral period is rumoured to be up to five years.

Government-controlled Royal Bank of Scotland (RBS), which owns Ulster Bank, is expected to pay its staff a bonus, 50% of which will be convertible into cash in June 2010 with a further 25% available in 2011 and the remainder one year later.

The challenge for banks is to find a balance as it is difficult to keep talented staff if they feel undervalued. Speaking last week at a parliamentary hearing, RBS chief executive Stephen Hester said that institutional shareholders had raised concerns about the ability of banks to keep and motivate good people without over paying people.

And City minister Paul Myners backed up this view when he said that banks needed to ensure they can recruit and motivate people otherwise they will be left behind by competitors. He added that RBS could not be expected to redefine the banking industry alone.

In 2009, profits in the City rocketed as the equity and debt markets rebounded. As a result the major investment banks will be able to show that the ratio of total compensation to net revenue will fall significantly from this time last year. This is due to the huge revenue recovery. The 2009 bonus payment will go ahead at the same time as many governments are trying to deal with recouping the cost of the bank bailout by reducing spending and cutting services.