Banks agree to lending targets and pay restraints

| February 9, 2011 | 0 Comments

Chancellor George Osborne is today expected to announce that a deal has been reached between the Government and the banks with regard to lending targets and restraints on pay.

The report comes a day after Mr Osborne confirmed he is maintaining the levy on banks, raising an additional £800 million this year and £2.5 billion in the coming years.

The so-called Project Merlin, led by John Varley, former head of Barclays, and Mr Osborne, looks like it will finally be signed off after banks will agree to a number of terms.

Banks will pledge to reduce bonuses and divulge information about executive pay, while also agreeing to boost lending to approximately £190 billion this year - 40% of it to SMEs.

The Chancellor is also expected to announce that if banks do not meet lending commitments, chief executives will not be able to receive their maximum pay and bonus.

The news is long awaited since the salaries and bonus payouts to the major banks has sparked public outrage.

Last week, the Sunday Times reported Britain’s top banks will pay out a combined £6 billion in bonuses.

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