| Banco Santander to pull out of SME lending agreement |
| Friday, 14 January 2011 01:24 |
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Project Merlin weakened as one of the UKs most important bank opts to go it alone.
Project Merlin weakened as one of the UKs most important bank opts to go it alone. Banco Santander (NYSE:STD) could opt to go it along on SME lending. This morning it is reported that the owner of former high street brands, Alliance & Leicester and Abbey, is likely to pull out of Project Merlin.Project Merlin is a project aimed at securing consensus amongst UK banks on issues including lending to SMEs. The Times reports that Santander is keen to strike a unilateral deal with the Treasury over lending. According to Harry Wilson at The Telegraph Santander's decision follows increased speculation over the past week that the lender did not consider the Project Merlin talks to be relevant to it, given that it is already aggressively increasing lending and pays out about £100m in bonuses, compared with the multi-billions of pounds allocated to staff incentives by most of the other banks. Treasury officials and Santander managers are now in direct talks over lending commitments for 2011 and are expected to announce an agreement within days. Santander's decision to quit Project Merlin makes it the second bank to leave the group after Standard Chartered exited the negotiations with the Government in November, saying the talks were not relevant to it. An announcement on a deal with the Government is expected as early as next week, but could now take the form of several separate agreements.
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