Banks pledge to lend £190bn this year

| February 9, 2011 | 0 Comments
”Banks

After weeks of tense negotiations, Britain’s largest banks have agreed to lending targets and pay restraints.

Chancellor George Osborne today announced that under the so-called Project Merlin, banks will lend around £190 billion to businesses this year - including £76 billion to SMEs.

Last year, banks loaned £179 billion to businesses.

The four financial institutions participating in the project are Royal Bank of Scotland (RBS), HSBC, Barclays and Lloyds.

Total bonuses paid to UK-based staff of the banks will be less than last year as part of the agreement.

Spanish banking giant Santander has agreed to the lending parts of the deal but there was no agreement on pay.

Meanwhile, the agreement comes as bonus payouts to the major banks continue to meet with public outrage.

However, the Chancellor said the deal will not necessarily appease the public. Bonus payments are still expected to total around £6 billion this year.

RBS today said its investment bankers would share in a bonus pots of around £950 million, while Eric Daniels, outgoing chief executive of Lloyds Banking Group, will receive a £1.45 million shares bonus.

However, the agreement includes a clause that if banks do not meet lending commitments, chief executives will not be able to receive their maximum pay and bonus.

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