During the hearing, members are expected to express frustration over the secrecy that surrounds bonuses, including suspicions over 'supplementary salaries' being paid as an alternative to bonuses.
The BBC reported this morning that deputy prime minister, Nick Clegg, said he understood public anger over bonuses and was urging banks to be "sensitive to the public mood".
"Of course we've got to put pressure on those people who run state-owned banks... to be sensitive to the public mood," Clegg said. "We've also got to get the banks to lend more money. That's the most important thing of all to businesses, to first-time borrowers."
The coalition agreement, published last May by the Conservative and Liberal Democrat parties to outline their plans for their time together in government, made a commitment to "robust action to tackle unacceptable bonuses".
During the proceedings, which began at 10am, Diamond was asked by Conservative committee member, David Ruffley MP, to commit to resign if the bank did not significantly increase lending during this year.
"No bank should ever make a specific commitment to lend without looking at the creditworthiness of the borrower," Diamond said in response. "We are not making the UK a better place with weak standards around credit."
According to The Independent, Diamond’s bonus could run as high as £10 million, while The Telegraph estimates that Stephen Hester, chief executive of the Royal Bank of Scotland, which is almost wholly owned by the UK taxpayer, can expect a £2.5 million bonus as part of a £7 million package.
The chief executive of Barclays Global Retail Banking arm, Antony Jenkins, is also facing the committee.
