British chancellor of the exchequer George Osborne will today demand that banks, including those that did not receive a taxpayer rescue, set corporate-lending targets.
Mr Osborne is set to meet chiefs of Britain's biggest banks at the Treasury later today. Banks will offer to fund a study of companies' borrowing problems, one source said.
The showdown between the government and banks comes days after treasury minister Mark Hoban urged lenders to show restraint over bonuses as Britain emerges from recession.
He said officials are exploring the introduction of a tax on bank profits and pay. Osborne last month announced a £2 billion levy on bank balance sheets.
The institutions in which the government holds a stake, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, are virtually certain to bow to the pressure to set goals or loans, said the source.
Conservative prime minister David Cameron and his Liberal Democrat deputy Nick Clegg in May forged a coalition agreement that pledged to create a "major loan guarantee scheme and the use of net lending targets for the nationalised banks."
RBS and Lloyds failed to meet lending targets after the UK treasury spent £117 billion rescuing the banking industry, the National Audit Office said in December.
The public spending watchdog said in a report the two banks received £76 billion pounds from the government and that the government can do little to force them to lend more to companies.
Britain's five largest banks, HSBC Holdings Plc, Barclays Plc, RBS, Lloyds, and Standard Chartered Plc, are expected to make a combined profit of £28 billion in 2011, according to analysts.
Bloomberg