Project Merlin progress stalls

Talks between the UK's big banks and the government over the amount they will lend to small businesses have stalled, according to reports over the weekend.Project Merlin, as the plan is known, had been tipped to be unveiled possibly as early as Monday, but last minute hitches mean an agreement may now not be reached for weeks, though a deal is still expected to be concluded.Merlin would have seen the banks agree to lend up to £200bn, or close to that figure, to small and medium-sized businesses in 2011. In exchange for an acceptable lending guarantee, the government would ease the pressure on bonuses.The five major banks - Lloyds, Royal Bank of Scotland, Barclays, HSBC and Santander - are reported to have offered a 10% increase on last year's lending to £180bn, but there are said to be doubts in the government over how this could be tracked.There is also said to be disagreement over the level of disclosure of top earners' pay, with the banks refuting claims that an agreement had been reached that the top five would be revealed.On Saturday, Sir John Vickers, the head of the Independent Commission on Banking, which is looking into the structure of UK banking, suggested wholesale break-ups on the UK's big banks were unlikely.Sir John said the ICB was still examining ways to separate the different activities of the country's top banks, but added it was unlikely to support "narrow" bank models over diversified, bigger groups.