Project Merlin deal is agreed by UK's largest banks  
The UK’s largest banks made an agreement on the Project Merlin lending and bonus deal, the government announced yesterday.

Under the new agreement, HSBC, Barclays, Royal Bank of Scotland (RBS) and Lloyds Banking Group are set to lend around £190bn to businesses this year, including £76bn to smaller companies. The deal will also see the controversial bankers’ bonuses being curbed and details of top earners salaries will be revealed.

The banks will be set targets for giving out loans to businesses and these targets will be monitored by the Bank of England to see if they are being met.

The chancellor also declared that a tax on bonuses would not be imposed, even though he was under considerable pressure from Labour to do so.

On Tuesday, we reported that the deal was imminent between the banks after chancellor George Osbourne announced the government had raised a levy on banks to £2.5bn this year, raising an extra £800m.

The raising on the levy was not warmly received by the shadow chancellor Ed Balls who said that he believed that the banks will not be forced to lend if they do not want to and that George Osbourne was “putting politics ahead of economics.”

It will be interesting to see if Ed Balls’ predictions are right. Let’s hope that if the banks’ loan targets are to be monitored by the Bank of England, it will motivate them into giving more to smaller companies.

For more information, please visit www.glazers.co.uk

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