As the Treasury insisted it had played hardball in its talks with the four big banks -- RBS, Barclays, Lloyds and HSBC -- and secured a one-year deal “way above expectations”, with a 15% increase in bank lending and £2 billion more in taxes from them in 2011 compared to 2010, the Chancellor of the Exchequer signalled it was time to end banker-bashing.
He told MPs that, while he recognised public anger towards the banks, it would not create one percentage point of growth or one job, insisting: “Britain needs to move from retribution to recovery.”
Yesterday, research disclosed how City of London financiers provided the Conservative Party with more than half of its funding last year, £11.4m.
Labour’s Ed Balls was scathing about the Coalition deal with the banks, dubbed Project Merlin, saying: “For a Chancellor who talked so tough in opposition and who even yesterday continued to promise much, this is a pitiful outcome and an embarrassing climbdown.”
As details of the deal were published, taxpayer-backed RBS and Lloyds revealed pay packages for their top bosses, with Mr Hester in line for £2.04m and Mr Daniels offered a £1.45m bonus.
Last year, Mr Hester and Mr Daniels waived bonuses after being awarded £1.6m and £2.3m respectively for 2009. Both handouts will be in shares that can be cashed in after three years -- and neither bank will pay more than £2000 in upfront cash bonuses to any staff.
RBS said its overall bonus pool would be lower than 2009, at less than £950m for 2010. It is thought the total bonus pool for all banks will be around £6bn.
Last night, the CBI hailed the rise in bank lending, saying: “An increase of up to 15% on last year’s lending could make a real difference to small and medium-sized firms with high-growth potential, as demand picks up.”
Liz Cameron, of the Scottish Chambers of Commerce, said: “The journey towards re-establishing solid and lasting relationships between business and the banks remains challenging.”
In contrast, Grahame Smith, from the Scottish Trades Union Congress, said: “This pathetic deal only serves to underline that the banks continue to exert a stranglehold on Government action.”
The deal with the four main banks was struck despite the surprise move by Mr Osborne to increase the new bank tax by £800m to £2.5bn this year, which some had feared could throw discussions off course.
The Liberal Democrats’ Treasury spokesman in the House of Lords stepped down last night after criticising the Government’s deal with the banks.
Lord Oakeshott had given up the role “by mutual agreement”, LibDem Chief Secretary to the Treasury Danny Alexander said.
Earlier last night, Lord Oakeshott branded the Treasury’s deal with the banks as “pitiful”.
