Cabinet Office denies report that banks might pull out of Big Society Bank deal

Financial Times claims HSBC, Barclays, the Royal Bank of Scotland and Lloyds Banking Group might change their mind over investing £200m

Cabinet Office
Cabinet Office

The Cabinet Office has said there is "no suggestion" that four high-street banks will pull out of an agreement to invest £200m in the Big Society Bank, despite reports in a national newspaper this morning.

According to the Financial Times, bankers are "furious" because the Big Society Bank is likely to make a loss for the first five years, and to make relatively low returns thereafter, meaning there will be no return on the banks' investment.

HSBC, Barclays, the Royal Bank of Scotland and Lloyds Banking Group agreed in February to inject money into the bank "on commercial terms", as part of the Merlin agreement, which focused mainly on banks' lending targets.

However, the banks are still in negotiation with the Cabinet Office over the terms of the deal, and the parties will meet this week for further discussion.

A Cabinet Office spokesman said: "At present, there is no suggestion that this money won't be invested as the banks have agreed and we're absolutely on course to start investing in good causes this summer."

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