The government’s Project Merlin scored a wizard result for commonsense as the bank’s caved
in to demands to lend more and pay less bonuses.
Chancellor George Osborne has ended up pretty much with what he wanted from the start
after trumping the bank’s arrogant refusal to reform their attitude to business with an £800
million fine in the guise of extra bank levy taxes.
The high street Big Five have all signed up to the agreement – Barclays, HSBC, Lloyds TSB, the
Royal Bank of Scotland and, with respect to lending, Santander.
The Project Merlin accord covers three main areas:
Lending to businesses
The banks have set aside an extra £11 billion for lending to business this year – up to
£190 billion from £179 billion last year. More is available if required.
At least £76 billion is earmarked for small and medium-sized businesses (SMEs), which
is 15% up on on lending in 2010.
Lending to SMEs will become part of the performance metrics of each bank’s chief
executive and senior managers responsible for business lending
Pay and Disclosure
Bank bonuses are capped at no more than the amount paid in 2009 to reflect ‘explicit
consideration and reflection’ the banks have given to the mood of the public over
paying their staff.
The banks will also disclose how much the 10 highest paid staff in each business area
earn.
The pay of the 5 highest paid ‘senior executive officers’ will also be published annually
on an unnamed basis.
The banks will voluntarily disclose this information in 2011, covering pay in 2010.
Regional Growth and the Big Society
The banks have announced additional support of £1.2 billion to support regional
growth and the Big Society. Banks will provide £200 million over two years to set up
the Big Society Bank.
The remaining £1 billion will go to financing potentially high-growth SMEs.
This is in addition to the £11 billion extra lending to SMEs.
The net result for the government is the banks are lending an extra £12.2 billion, capping staff
bonuses and publishing how much the big earners are paid.
