Merkel said bonus systems must be clearly tied to the long-term success and profitability of banks and criticised them for splashing out money in 2008, a bad year for most global financial institutions.
“It's incomprehensible that banks that are being bailed out by the state are paying out huge bonuses in some cases,” the chancellor told Der Spiegel in a report to be published on Monday.
Merkel said she would pursue the topic at a G-20 meeting in London in April.
The German government last year approved a €480-billion bank bailout plan. On Friday, it passed a €50-billion stimulus package that foresees pumping money into infrastructure and cutting taxes to haul Europe's largest economy out of its worst economic crisis in decades.
The high salaries of banking executives and the bonus payment system have triggered an outcry and a heated debate in Germany about using taxpayers' money to help banks ride out the crisis.
“The loss of a sense of reality and the cynicism of some bank leaders continue to shock me. Managers are role models – both good and bad,“ German Foreign Minister Frank-Walter Steinmeier told Der Spiegel.
But Oskar Lafontaine, head of the opposition Left party criticised the German government's unconditional help for banks.
“If the German government gives billions to the banks without ensuring that the money isn't used for bonus payments, then it's using taxpayers' money in an outrageous way,” he said.