Osborne and Cable call for further discussions over Christmas as banks promise restraint on bonuses but give no details
An offer by major banks to lend �200bn to businesses and show "pay discipline" is to be the subject of further discussions between senior ministers and top bankers over the Christmas period.
George Osborne, the chancellor, and Vince Cable, the business secretary, called for another round of talks after a showdown with bank bosses today to discuss lending and bonuses, just as the bonus season begins in the City and coinciding with public sector job cuts.
The bankers ? including John Varley, the outgoing chief executive of Barclays, and Douglas Flint, the new chairman of HSBC ? presented a plan to ministers that would involve a pledge to lend �200bn to businesses, including �70bn specifically for smaller companies.
The so-called project Merlin proposals, which have been led by Varley, also included a promise for restraint on bonuses but did not provide any specific assurances on what this might mean.
The bankers are eager to calm the political rhetoric surrounding their bonus season and to return to the calmer relations which existed between the sector and governments before the 2008 banking crisis.
Top bankers from Santander, Lloyds and Royal Bank of Scotland also attended the talks which had been delayed by a day after the chancellor was held up by the snow.
Ministers felt discussions were constructive, even though they did not reach a specific outcome and were eventually overshadowed by the furore surrounding Cable's comments that he had "declared war" on Rupert Murdoch and his media empire.
Cable had gone into the meeting keen to achieve greater disclosure on the ways bankers are paid, a move he regards as crucial to show the coalition is taking action.
However, the chancellor has been less focused on forcing bankers to admit how much they pay themselves outside the boardroom and backed away from proposals designed by City grandee Sir David Walker to publish the number of staff earning more than �1m.
The government tonight said the talks with the bankers had discussed "bank lending ? particularly to small and medium-sized businesses ? and pay discipline, and how the banking industry can best support economic growth and job creation in the UK in 2011 and beyond".
"The banks have put a number of proposals on the table. The government affirmed its desire to see a strong, responsibly and internationally competitive financial sector. The dialogue was constructive," a spokesperson added.
"These proposals will be the subject of further discussions over the Christmas period with the aim of building a sustainable, co-operative relationship between the lenders and government in 2011 in support of the economic recovery."
While Cable had raised the idea over the weekend that new taxes could be imposed on banks if they did not start lending more to business Osborne appeared to step back from this in parliament today.
Osborne told MPs that the �2.5bn a year bank levy on balance sheets showed the government was serious about tackling banks.
"What we've demonstrated in the last couple of weeks is we are prepared to increase the rate of the bank levy in order to sustain the revenue," he told parliament.
The bonus round has been particularly fraught since the bailout of the banks in 2008.
The CEBR economic forecasting group is predicting that some �7bn will be paid out to London bankers this year. This is down slightly on last year as revenues in investment banking have fallen back.
Even so, data produced by Dealogic showed that global mergers and acquisitions reached $2.7tn (�1.7tn) in 2010, up 18% on the year, although activity had slowed in the last quarter.
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