BRITAIN’S banks could face a barrage of new bank levies and taxes if they fail to keep credit flowing in line with the Merlin deal struck with the Treasury, Prime Minister David Cameron has warned.
Speaking before a committee of MPs, Cameron said that banks could face “further bank levies, taxes, bonus taxes and all the rest of it… If they don’t fulfil their side of the deal, then clearly the government wouldn’t have to fulfil its side of the deal”.
The Treasury had promised to avoid further penalties for banks if RBS, Lloyds, HSBC, Barclays and Santander UK made available £190bn of credit this year, versus £179bn lent last year.
But the number is a “capacity”, not a target, meaning that banks only have to show the credit is available rather than to boost lending by £11bn. The deal has sparked criticism that it will be impossible to measure. But a Treasury source told City A.M. that it could determine whether banks had met their obligations through business surveys and other economic data.