Talks between the government and Britain’s banks to agree targets for lending and pay have stalled.
It had been expected that an announcement on the “Merlin Project” as it has so been named, was likely to come early this week.
The scheme is an attempt by the Government to get lenders to agree to targets over borrowing and pay disclosure in attempt to heal the rift caused by the financial meltdown and subsequent public anger.
The project is an effort by the coalition to seek agreed targets over with lenders over borrowing after seeing a ten year low on mortgage deals – this is also an attempt to agree upon pay disclosure in the banking system to try and heal the public anger against the financial industry caused by the financial meltdown.
This delay comes just a day after Sir John Vickers, announced the governments “spectacular failure” to minimise risk before the financial crisis.
The main stumbling block is suggested to be David Cameron’s “Big Society Bank” vision, which would give funding to charities.
Speculation that financial contributions from ‘the big five’ are not likely to reach the £1-£1.5bn target that was being discussed in meetings with ministers and the banks last year.
The most important aspect of the “merlin project” is for the banks and ministers to agree an overall lending target to which the UK’s biggest lenders will sign up.
This is looking likely to fall short of the Government’s original suggestion of £200bn for new lending and small business lending.
This figure is more likely to be around £65-£75bn.
The talks are not likely to continue until next week due to key figures in the discussions David Cameron and George Osborne attending the World Economic Forum in Davos.