* Standard Chartered out of talks on bonus curbs
* Bank says will pay bonuses as it sees fit
* BBA says reports about cuts to bonuses is speculation
* BBA says it is talking to govt on pay issues
(Updates with Standard Chartered response)
By Sudip Kar-Gupta
LONDON, Nov 25 (Reuters) - Standard Chartered dealt a blow to a possible British banking pact on the emotive issue of bonuses when it said it had pulled out of a possible deal because most of its business was outside the country.
Executives from Barclays, HSBC, Standard Chartered and Royal Bank of Scotland had been discussing a deal in the wake of lingering public anger against bankers due to the credit crisis.
On Thursday Standard Chartered declared it had withdrawn from the bonus talks, because most of the bank's operations take place outside of Britain -- in the Middle East, Asia and Africa.
"We were part of the discussions but we have withdrawn from them," said a London-based spokesman for the bank.
"The reality is that 97 percent of our staff are overseas and more than 90 percent of our profits come from outside the UK. We do not want to be in a position where we're having to treat our UK staff differently," he added.
The bank said it would pay bonuses as it saw fit, while Barclays, HSBC and Royal Bank of Scotland declined to comment.
BONUSES DISCUSSED WITH GOVERNMENT
The Centre for Economics & Business Research (CEBR) said in October Britain's financial sector was expected to get 7 billion pounds ($11.04 billion) worth of bonuses for 2010, down 4 percent from last year.
The British Bankers Association (BBA) said banks have been talking with the government about pay, as part of a wider dialogue looking at boosting lending to small businesses and how to broaden banks' role in society.
"We have said repeatedly that the banks understand the public mood with respect to remuneration and the banks also understand their societal responsibilities," British Bankers Association Chief Executive Angela Knight said in a statement.
"It is not surprising therefore that we are talking with the government on these and a range of other issues," she added.
Politicians around the world have heaped pressure on banks to ensure that state aid they received during the credit crisis is used principally to help them lend more to businesses, rather than to award themselves excessively large salaries.
British finance minister George Osborne said earlier this week he favoured an international approach to regulating disclosure of bank bonus payments, a move that could stoke tensions within the coalition government.
Britain also expects to raise about 2.5 billion pounds a year by 2012-13 from a permanent tax on British and overseas banks' balance sheets.
However, many British-based banks have warned that increasingly tough regulation could drive top staff away from London and over to rival financial centres such as Geneva, Singapore or Hong Kong. (Editing by Myles Neligan and Matthew Jones) ($1=.6341 Pound)