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U.K. to Announce Loan Agreement With Banks After Noon

A deal between the British government and the country’s biggest banks on pay and business lending, known as Project Merlin, will be announced after 12:30 p.m. today by Chancellor of the Exchequer George Osborne.

Lloyds Banking Group Plc, Barclays Plc, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Banco Santander U.K. are expected to agree to make loans of about 190 billion pounds ($306 billion) this year to companies with fewer than 250 employees, said two people familiar with the discussions, who declined to be identified because the talks are confidential. Bonus restraint will also be included in the document.

The deal follows 10 weeks of talks between government and lenders, and comes a day after Osborne told the banks they would have to pay an additional 800 million pounds in tax by April. That announcement angered the banks, who hadn’t been informed of the decision before it was made, a person familiar with the banks’ position said yesterday.

“The government has not got as much as they hoped from the banks and the levy increase is one way of suggesting they are tough,” Tim Bale, professor of politics at Sussex University, said in a telephone interview. “It’s a pretty transparent way of doing it.”

Four of the banks will also agree to disclose the remuneration details of the five most senior employees below board level, though not their names, one of the people said.

Sky News reported the announcement earlier today.

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