High Street Banks Reach an Agreement on Loans and Bonuses

The major UK banks have been severely denounced by many consumers over the last couple of years for their unwillingness to lend to individuals or businesses and also for high bonuses paid to their executives regardless of the fact that the banks haven’t been doing great.

This week four major banks in the UK have reached a settlement with the Government, according to which they have agreed to offer a minimum amount in new business loans and promised to reveal the information about their executives salaries and bonuses.

Barclays, RBS, Lloyds Banking Group and HSBC have agreed to lend at least £190 billion worth of new business loans between them, over the course of 2011, and pledged that they would pay less bonuses to their staff and disclose details of bonuses and salaries.

One more bank, Santander, has also made a commitment to offer new loans, but hasn’t agreed to be more transparent about salaries and to pay less bonuses.

About £76 billion out of £190 billion worth of business loans will be offered in loans to SMB’s, which will be an increase in lending of 15%  above the total amount of loans  SMB’s last year.

The new scheme will be called Project Merlin and the government hopes it will help improve the situation in the banking sector.

However, business groups are worried about the cost of obtaining a new business loan. If interest rates charged on these loans are too high, many SMB’s wouldn’t be able to afford them.
 


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