Tuesday, December 21, 2010

Banks agree £200bn for businesses but pay talks unresolved

George Osborne appeared to step back from suggestions he might impose new taxes on banks if they do not lend more to businesses. Photograph: Steve Back/Rex

An offer by major banks to lend £200bn to businesses and show "pay discipline" is to be the subject of further discussions between senior ministers and top bankers over the Christmas period.
George Osborne, the chancellor, and Vince Cable, the business secretary, called for another round of talks after a showdown with bank bosses today to discuss lending and bonuses, just as the bonus season begins in the City and coinciding with public sector job cuts.
The bankers – including John Varley, the outgoing chief executive of Barclays, and Douglas Flint, the new chairman of HSBC – presented a plan to ministers that would involve a pledge to lend £200bn to businesses, including £70bn specifically for smaller companies.
The so-called project Merlin proposals, which have been led by Varley, also included a promise for restraint on bonuses but did not provide any specific assurances on what this might mean.
The bankers are eager to calm the political rhetoric surrounding their bonus season and to return to the calmer relations which existed between the sector and governments before the 2008 banking crisis.

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