Chancellor George Osborne today announced a new deal with the country's biggest banks to curb bonuses, increase lending to small businesses and improve transparency on pay for executives.
Barclays, Lloyds Group, RBS and HSBC agreed to reduce total bonuses for UK-based staff from 2010 levels, and committed to disclose the pay of their executive board members as well as the top five highest paid executives not on the board.
As part of the talks, known as Project Merlin, the banks agreed to make available £190 billion of new credit to business in 2011, up from £179 billion actually lent in 2010. £76 billion would be made available to small and medium-sized Enterprises, up from £66 billion in 2010. The banks said that if demand exceeded these levels, they would lend more.
Also announced today was the additional commitment of £1.2 billion to support regional growth and the Big Society. Of this the banks said they would provide £200m of additional capital over two years to set up the Big Society Bank.
Welcoming the deal, Chancellor George Osborne said,
"The anger at the terrible mistakes of the banking industry, and the failure of those who regulated it, will long remain -and rightly so. But let us as a country confront this hard truth. Anger and retribution will not bring one percentage point of economic growth or create one single new job. The anger will remain. And we must never make the same mistakes again. But Britain needs to move from retribution to recovery.
"Today we get the banks to commit, with £10billion more lending for small businesses; more for our regional economies and society; £10billion more in taxes; lower bonuses and the most transparent pay regime in the world.
"In return let us build a banking industry that creates jobs for hundreds of thousands of our citizens and competes in the world. Above all let us make sure the economic catastrophe that befell this country can never be repeated. That is how this Government will clean up the mistakes of the past.