The government has unveiled the details of the agreement it has sealed with Britain’s largest banks
on bonuses and lending.
Under the scheme – which was named ‘Project Merlin’ – the banks have agreed to lend businesses
£190 billion this year, and will have to reveal details on the top salaries paid within each firm. The
agreed lending limit will include £76 billion to small businesses. Loan targets will be monitored by
the Bank of England.
The announcement comes just two days after it was confirmed that taxes on banks would be hiked
to collect an extra £800 million this year.
The agreement reached under Project Merlin covers Barclays, HSBC, Royal Bank of Scotland and
Lloyds Banking Group. Santander has also agreed to the lending stipulations.
The banks have also pledged to provide £200 billion of capital for the government’s ‘Big Society
Bank’, which will help provide financing for a variety of community projects.
The big banks – which look set to pay out bonuses totalling over £6 billion this year – have agreed to
a number of transparency measures relating to their salary policies. These include having to publish
pay details of their five highest-paid executives, limiting the amount of individual bonuses that can
be paid in cash to no more than £2,000, and legislation from 2012 that will mean each of the big
banks will have to publish remuneration details for board members and top executives.
Today’s announcements have not been met with universal approval. Andrew Cave, of the
Federation of Small Businesses, said: “The vast majority of businesses are not going to the banks
and seeking finance at the moment … Those that do are telling us that the cost of borrowing – both
existing and new borrowing – is increasing and those issues are not going to go away with today’s
announcement.”
