The Treasury is considering removing a cap on bankers' bonuses as part of a post-Brexit shake-up of City rules.
Sources said no final decisions had been made yet, but confirmed Chancellor Kwasi Kwarteng considered it a way of making London a more attractive place for global banks to do business.
City bosses have long complained about the EU-wide bonus rules which cap bonuses at twice an employee's salary.
They say they lead to higher base pay that pushes up banks' fixed costs.
Those costs cannot be adjusted in line with the firm's financial performance, they add, making the UK less attractive than the US or Asia.
The BBC says people close to Mr Kwarteng confirmed reports that the new chancellor is considering the move.
Critics have argued that uncapped bonuses lead to the kind of excessive risk taking that spawned the financial crisis of 2008.
Sufficient disincentive
But others argue that other new rules that can hold senior managers personally and potentially criminally responsible for misconduct, plus the ability to claw back bonuses years after they are granted, achieve a sufficient disincentive.
Taking the lid off bankers' pay at a time when many households are facing hardship from the rising cost of living will undoubtedly provoke outrage in many quarters, but it is just one of a number of deregulation initiatives being considered.
The UK Government is also keen to relax rules limiting the amount insurance and pension funds can invest in assets that are harder to sell at short notice - such as long-term infrastructure projects.
These rules are part of pan-European regulations collectively known as Solvency II.
But the Bank of England is concerned that relaxing the rules could expose pensioners' savings to greater long-term risk and that lowering the amount of ready cash firms are required to hold could see them pay out any money freed up to their shareholders rather than invest in projects favoured by the government.