View more on these topics

Banks claim they missed business loan target due to low demand

The UK’s biggest banks have missed the £19bn quarterly lending target to small and medium-sized businesses by £2.2bn in the first quarter of this year.

Under Project Merlin, which was agreed in February, Barclays, HSBC, Lloyds Banking Group, RBS and Santander agreed to increase gross new lending to businesses by 6 per cent, up from £179bn in 2010 to £190bn in 2011. Of that, £76bn must be lent to SMEs.

However, lending to SMEs in the first quarter reached just £16.8bn.

The banks’ gross lending totalled £47.3bn in the first three months of the year, which is in line with the £47.5bn they need to provide each quarter to stay on target in terms of total new lending to businesses.

A spokesman for the Merlin banks says SME lending fell short of expectations due to limited demand.

He says: “Demand in some sectors, particularly among SMEs, remains muted, but we are devoting considerable time, effort and resource, particularly through the Better Business Finance initiatives, to ensure that we help viable businesses to access finance. Nonetheless, economic conditions remain challenging and demand for lending is likely to vary through the year.”

Emba group sales and marketing director Mike Fitzgerald says: “The Government has got to put pressure on the banks to lend more to SMEs.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm