Banks fail to hit Project Merlin small business lending target
Posted by Dan Martin in Finances on Sun, 22/05/2011 - 12:47
The UK's biggest banks are not on track for hitting the targets for small businesses lending agreed with the government.
As part of the Project Merlin deal HSBC, Lloyds, Barclays, Royal Bank of Scotland and Santander pledged to lend £190bn to businesses in 2011 including £76bn to SMEs.
To keep on track the banks would need to have provided £19bn to small businesses in the first three months of the year. However, new Bank of England figures show that £17bn was lent, £2bn short of the target.
Bankers claim that demand for loans from SMEs remain low and insist they will meet the total lending target for all businesses.
Prime minister David Cameron however last week warned banks that increased taxes could be on the cards if they failed to lend enough to SMEs.
David Frost, director general of the British Chambers of Commerce, said: “The Project Merlin figures are disappointing, but they are only part of the story for businesses. Many companies complain about strained relationships with banks both during and after the recession.
“Over-centralised processes, unclear decision-making and a lack of proper, local relationship management from banks, mean that in many cases, business customers have been put off applying for finance.
“Money must reach the most productive parts of the economy and that means improving business lending. That relies on banks providing greater transparency and local support, not just national targets and numbers.”
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