LONDON (Reuters) - Prime Minister David Cameron hinted on Tuesday that banks could face new taxes if they did not fulfill an agreement to boost lending to businesses.
The government would not feel bound by its commitment not to impose new taxes or levies on banks if the banks did not keep a bargain to lend more to businesses, as agreed under the so-called “Project Merlin” deal in February, Cameron told a parliamentary committee.
“The other side of Project Merlin was that we will not introduce further bank levies, taxes, bonus taxes and all the rest of it as long as this lending is forthcoming,” Cameron said.
“That is the point of Project Merlin. So if they don’t fulfill their side of the deal, then clearly the government wouldn’t have to fulfill its side of the deal,” he said.
The Project Merlin agreement with the banks was aimed at curbing bonuses and boosting lending to businesses that has been weak since the global financial crisis hit.
It called for Britain’s top banks to lend about 190 billion pounds gross to businesses this year, up from about 179 billion previously.
Britain’s “Big Four” banks, Barclays (BARC.L), HSBC (HSBA.L) and part-nationalised lenders Royal Bank of Scotland (RBS.L) and Lloyds (LLOY.L) took part in the Project Merlin talks with the government.
Cameron said recent figures on bank lending had been disappointing but they only went up to March, whereas Project Merlin covered the whole of this year.
“I think we should judge this across the year rather than any one given month,” Cameron said.
Reporting by Adrian Croft and Matt Falloon; Editing by David Holmes