Banks will reveal salary details of their highest paid staff and lend businesses £190bn this year under Project Merlin, but their top earners will not be hit with a bonus tax, the government said today.
In the deal hammered out between ministers and the City, banks will increase lending including £76bn to small firms, and improve transparency around staff pay.
HSBC, Barclays, Royal Bank of Scotland (RBS) and Lloyds Banking Group have signed up to Project Merlin, while Santander has agreed to the lending parts of the agreement.
The Bank of England will monitor whether loans targets were being met.
Under the deal, the aggregate 2010 bonus pool of the four banks UK-based staff will be lower than in 2009, the Treasury says, though it does not say by how much.
However, Chancellor George Osborne has formally ruled out imposing a bonus tax.
On Tuesday, the government increased a levy on banks to £2.5bn this year, raising an extra £800m for the public purse.
Other pledges announced today include providing £200bn of capital for David Cameron's Big Society Bank, which is supposed to finance community projects.
However, while banks have also been asked to show restraint in bonus payments, these are expected to total more than £6bn this year.
RBS, HSBC, Lloyds and Barclays have agreed to publish the pay of their five highest paid executives, who are below board level, though this will not include top-earning traders who do not have managerial responsibility
The chairmen of banks' remuneration committees will tell the City the FSA that they are cutting the amount provided for bonuses in 2010, after negotiations with ministers.
Lloyds and RBS repeated their 2010 commitment that the cash element of any bonus will not be more than £2,000.
The government will legislate that from 2012 all big UK banks must publish the pay of their board members plus the eight highest paid executives below board level.
This disclosure requirement will apply to the UK operations of overseas banks such as Goldman Sachs and UBS.
The government says the promised credit to business would be among the performance targets used to determine bonuses of bank chief executives.
However, the provision of credit to UK businesses will be on commercial terms.
The British Chambers of Commerce (BCC) has expressed concern that this means the lending pledge by the banks is "academic", amid member complaints about the soaring cost of borrowing despite an historically low Bank of England base rate.
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Responding to letter from Treasury Committee chair Nicky Morgan