Talks to rein in banker pay go on

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Talks to rein in bankers' pay are set to continue over Christmas, the Government has said

Talks to rein in bankers’ pay are set to continue over Christmas after bank bosses met George Osborne and Vince Cable to hammer out a deal, the Government has said.

The heads of Britain’s five biggest banks – including Barclays and part-nationalised players Royal Bank of Scotland and Lloyds Banking Group – were called in to see the Chancellor and Business Secretary earlier on Tuesday as they look to reach an agreement limiting excessive City handouts in the forthcoming bonus round and to boost lending to businesses.

The Government said talks – postponed on Monday for a day after Mr Osborne’s flight from the US was delayed due to the snow chaos – were “constructive”, but ongoing.

A spokesman said: “The banks have put a number of proposals on the table.

“The Government affirmed its desire to see a strong, responsibly and internationally competitive financial sector. The dialogue was constructive.

“These proposals will be the subject of further discussions over the Christmas period with the aim of building a sustainable, co-operative relationship between the lenders and Government in 2011 in support of the economic recovery.”

Banks and government have been locked in talks for some weeks over the issue of pay and lending, with concerns they will not meet original aims to have a deal agreed by the year end.

Mr Osborne and Mr Cable want to avoid a lavish bank bonus season at a time when the country is undergoing painful spending cuts following the recession, brought on by the banking crisis.

They also want to see the sector support the UK recovery through increased lending to small businesses.

It is thought the banks may agree to pledge £200 billion in lending to small businesses. But the banks are also said to want clarification on what the Government defines as an unacceptable bonus.

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