HSBC to snub Chancellor's £20bn loan plan A March 15 deadline has been set internally by the Treasury to complete the discussion for the loan guarantee scheme, with an announcement expected just ahead of the Budget, due on March 21. Treasury sources indicated that the talks are ongoing and that the discussions remain practical. Under the current proposals, banks would be charged a 100 basis point margin to comply with European Union state aid rules, as well as a further mandated 100 basis point to pass on to customers. "It depends on your cost of funding as to whether that 200 basis point charge works," said one senior banking source. The challenge is to make the scheme work for all the banks, which could prove to be impossible. The Treasury is understood to feel that given the funds will be offered on a commercial basis, it is only right that a charge is made, as was the case in the Government's 2008 credit guarantee scheme. However, it remains to be seen whether some form of deal can be broached. Barclays, one of the other big four UK banks, is also believed to have expressed some concerns about the charging structure and is said to have asked whether there might be a range of charges rather than a fixed fee. Another source indicated that concern over the charging structure was less important than the macro issue, of whether injecting the extra funds into the economy would actually stimulate growth. Recent Bank of England data shows that net lending continues to shrink, as a number of banks continue to reduce their balance sheets, with growing question marks from certain economists over whether there is even a need for the extra £20bn. The Chancellor announced the £20bn loan guarantee scheme at last year's Pre-Budget Report, alongside a £1bn business finance partnership (BFP) scheme which will see funds distributed through alternative channels. The Treasury is currently considering bids from a significant number of traditional fund and other managers to run portions of the BFP, with a decision possible at the same time as the loan guarantee scheme is announced. Discussions with the European Union over state-aid clearance for both schemes are understood to be continuing but remain positive. Spokesmen for HSBC, Barclays and the Treasury declined to comment.