09/02/2011

Banks' Lending Statements Welcomed

The Government today welcomed the commitment by the UK's biggest banks on lending expectations and capacity, the size of the 2010 bonus pool, pay disclosure and support for regional growth and the Big Society.

This statement by Barclays, HSBC, Lloyds Banking Group, RBS and, with respect to lending, Santander, follows a period of discussion between the Government and the banks, known as Project Merlin.

The banks have stated a capacity and willingness to make available £190 billion of new credit to business in 2011, up from £179 billion actual lending in 2010. If demand exceeds this, the banks will lend more.

£76 billion of this new lending capacity will be to small and medium-sized Enterprises (SMEs). This is a 15% increase on the amount actually lent in 2010 actual lending (£66 billion).

Lending to small and medium sized businesses will be part of the performance metrics of each bank's chief executive and those of the senior managers responsible for business lending

The banks' aggregate gross new lending will be collected and published on a quarterly basis by the Bank of England. 



The Remuneration Committee of each bank will review and sign-off the remuneration of the 10 highest paid staff in each business area, where they do not already do so.

The pay of the five highest paid 'Senior Executive Officers' will be published annually on an unnamed basis, in addition to the pay of the Executive Directors already published on a named basis in annual accounts. This means that the salary details of at least seven executives (five + the minimum of two Executive Directors salaries based on current board representation) will be published for each of the banks involved in these discussions, compared to the maximum of five individuals required in the USA.

The banks will voluntarily publish this information in 2011, covering pay in 2010.

The Government will consult with a view to introducing similar disclosures on a mandatory basis for all large banks from 2012 onwards, but go further and consult on the basis that the pay of the eight highest paid 'senior executive officers' - in addition to those Executive Directors' salaries already disclosed - ought to be published annually.

The banks have also announced the additional support of £1.2 billion to support regional growth and the Big Society.

Of this the banks will provide £200m of additional capital over two years to set up the Big Society Bank.

The remaining £1 billion will be new capital available as soon as it is needed by the companies targeted by the Fund to increase the size of the Business Growth Fund, announced by the UK Business Finance Taskforce in October last year. Its objective is to increase the amount of equity investment allocated to potentially high-growth SMEs, and to make it easier for these businesses to get access to funding. It will support regional growth through a dedicated network of regional offices and those offices will actively coordinate with the Regional Growth Fund to support its objectives.

(BMcN/GK)

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