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Project Merlin bank agreement set to be revealed | Project Merlin bank agreement set to be revealed |
(40 minutes later) | |
Chancellor George Osborne is set to announce details of Project Merlin, the government's agreement with the banks. | Chancellor George Osborne is set to announce details of Project Merlin, the government's agreement with the banks. |
It is expected banks will agree to lend about £190bn to small and medium-sized firms this year and to reveal more about the salaries of top earners. | It is expected banks will agree to lend about £190bn to small and medium-sized firms this year and to reveal more about the salaries of top earners. |
But it is not clear how lending will be monitored or if the agreement will actually be binding. | |
Bank bosses were reportedly "livid" after the government increased a levy on banks on Tuesday. | Bank bosses were reportedly "livid" after the government increased a levy on banks on Tuesday. |
Bonuses | Bonuses |
Details of the long-awaited agreement, expected to be announced after Prime Minister's Question Time, are also expected to include support for the government's so-called Big Society Bank, providing finance for medium-sized businesses in economically disadvantaged parts of the country. | |
Banks have also been asked to show restraint in bonus payments - though these are expected to total £6bn this year. | Banks have also been asked to show restraint in bonus payments - though these are expected to total £6bn this year. |
HSBC, Barclays, Royal Bank of Scotland (RBS) and Lloyds Banking Group are set to agree to Project Merlin. | |
However Santander - which owns Alliance and Leicester and part of Bradford and Bingley - said last month it would go it alone in its talks with the government. | |
BBC political editor Nick Robinson said the government was determined to complete Project Merlin before banks start publishing their end-of-year results and bonus pools next week. | |
Banks loaned about £175bn to smaller businesses last year and the government wants a commitment that this will increase. | |
However representatives of small companies have expressed concern that the pledge by the banks will be "academic". | |
"The vast majority of businesses are not going to the banks and seeking finance at the moment," said Andrew Cave from the Federation of Small Businesses. | |
"And 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." | |
The chancellor said this week that he was taking a further £800m this year in his bank levy, a move he said "cleared the way" for Project Merlin to be agreed. | |
BBC business editor Robert Peston said executives had not been irked by the sum being demanded, but rather that it appeared to be a case of "bashing the banks" in the face of public pressure. |