Association of National Lenders: Members Updates

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Bank Lending to UK Businesses Declines

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Earlier in the year, banks were lambasted for their apparent reluctance to provide finance to UK businesses. The record shows that banks lent 10.3 billion pounds less in the last quarter of 2009 than they had the year before. Of course, banks would be free to lend as much or as little as they wanted if they had not accepted taxpayer support.

According to the agreement, any bank that received government money must lend a certain amount to businesses and private citizens. However, most banks failed to adhere to the agreement and they were justifiably rebuked in the press.

Of particular concern is the decline in commercial loans. After all, new businesses are essential to economic growth. But most new owners cannot afford to pay the high cost of rent and PCI DSS without a sizable loan. So, when the banks refuse to finance these ambitious upstarts, the entire nation suffers economically.

The unwillingness of the banks to offer loans threatens to become a hot-button issue as UK residents already hold them responsible for the mortgage and financial crisis. This latest episode may just be the straw that breaks the camel's aching back.

At present, the Treasury has demanded that banks reach their lending requirements in the next quarter or they will be subject to heavy fines. Many politicians have already accused the banks of scuttling a possible economic recovery due to their unwillingness to lend to businesses last quarter.