Official tries to explain banks’ low business lending levels

It was announced recently by the Business Secretary, Vince Cable, that the big banks in the UK were failing to meet their agreed targets with regards to lending to small and medium sized businesses. Figures were released recently showing that based on quarterly results the banks had not met their targets, and were therefore not on target for meeting their annual business lending minimum figure.

The banks have argued consistently that the reason behind the low lending figures for small and medium sized businesses was that in the current climate many businesses did not want to take out loans. Banks claim that whilst they are making credit available for business customers the low demand for finance means that there is little they can do to increase their lending figures until demand increases.

This has now been backed up by an industry official, Anthony Thomson, chairman and co-founder of Metro Bank. He said that his bank is now targeting small businesses as its main customer but that demand for borrowing is low. He said that whilst many businesses had signed up to the bank the demand for finance was much lower than had been expected, which meant that the bank was unable to lend as much to business customers as it may have anticipated. He also said that businesses were failing to look for the best rates on loans.

He said: ‘I hate to sound like I am defending the big banks but our experience is that there is just not the demand for credit from small companies.’ He also said: ‘I always thought small firms would be very sensitive to interest rates, but they are even less concerned about the rates than consumers.’

Tags: borrowing, Anthony Thomson, banks in the uk, Metro, industry official, business

Support for bank switching within EU

Banks in the UK have given their support to plans which would see customers able to move freely between banks within the European Union.

However, despite supporting the idea of allowing people to switch banks, concern has been raised about the way in which it is done.

Proposals have been put forward which would mean people have a single bank account number which they keep for life and can move to different banks.

Angela Knight, chief executive of the British Bankers’ Association (BBA) says that this would not be ideal and said that the BBA supports mobility but not portability.

“UK banks support EU initiatives to give customers greater choice and freedom. I believe the UK already leads the way in helping people move from bank to bank. We have a model here which would help cut out unnecessary red tape and give customers a fast, safe and effective way to move their account,” said Ms Knight.

“Proposals for one single account number from cradle to grave across the whole of the EU won’t work and could lead to less customer choice. Every country has its own way of doing things which would make it a nightmare to dovetail systems across all member states.

“It also fails to take into account the way people want to bank – for example having one account for the bills and another for saving,” she added.

Ms Knight said that she believes the current UK system of switching banks leads the way across Europe.

Tags: cradle, finance, customer choice, banks in the uk, ideal