Banks Told To Increase Supply Of Cheap Business Loans
We reported earlier this week on how banks in the UK had increased the amount of new loans provided to small and medium sized businesses and also how they were being criticised by the government for the high cost of business loans.
The Chancellor of the Exchequer, Alistair Darling, has since held a meeting with several of the leading high street banking names including, HSBC, Lloyds, RBS and Barclays during which he has told them in no uncertain terms, to increase the supply of loans to small and medium sized businesses and to make these loans realistically affordable. If the situation is not resolved, the Chancellor has said that banks will face an investigation into competition levels.
Mr Darling has said that there must be a more competitive banking system in the UK and to ensure this, he has instructed Ministers to conduct a series on interviews and investigations into individual banking practices, with particular regard to business loans, reporting any shortcomings to the Office of Fair Trading (OFT).
The concerns have arisen due to a large increase in the cost of a business loan. According to Treasury figures, two years ago there were only around 2 per cent of businesses who paid a margin of more than 9 per cent above base rate on their loans, however this year that figure has risen to almost a third of businesses with a loan.
Lord Myners and Baroness Vadera have been given the job of investigating banks’ lending policy over the course of the next few weeks. Mr Darling said “It is very important that each and every bank knows that there is someone looking over their shoulder. I want to make sure that we have a competitive banking system in this country.”
