The agreement has several components. Firstly (and perhaps most importantly), RBS, HSBC, Lloyds and Barclays, as well as Spanish bank Santander, have pledged to make £190bn available to lend to businesses - a whole £76bn of which will be reserved for small businesses. They’ll also commit £1.2bn to regions struggling with the impact of the recession, as well as pledging £200m to David Cameron’s new Big Society Bank, which will finance community projects.
The Bank of England has agreed to monitor that the banks are meeting their targets, but it remains to be seen what happens if they don't (what if, for example, they say that the demand from viable firms just isn't there?). And small firms have been quick to point out that these extra funds won't be much use unless the cost of borrowing also comes down - an issue that is 'not going to go away with today’s announcement’, as the Federation of Small Business complained today. So that's one problem the Government may have to re-visit.
On bonuses, some will feel the banks have also got off lightly. They'll have to publish the pay of their five highest-paid executives below board level (rising to eight next year, when it will also encompass all big UK banks) – but this won't include their top traders, and they won't have to name names. Which isn't really that transparent, is it? And while taxpayer-backed Lloyds and RBS have promised to keep the cash element of their bonuses to below £2,000, and the others are promising to ‘show restraint’, between them they’re still expected to dish out around £6bn this year (and the US banks will be able to do whatever they please). So that row's unlikely to go away either.
Getting an agreement of any sort is a political win for the Government, particularly after Shadow Chancellor Ed Balls suggested yesterday that they'd failed to do so (his new line of attack, inevitably, is that they've caved into the City's demands). But with bonus season fast approaching, the chances of the long-awaited Project Merlin slaking the general public's thirst for banker-bashing seem slim, to say the least.