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UK bank is cool on small business lending targets

BARCLAYS is the latest bank to criticise the idea of industry-wide government targets for lending to small firms.

Steve Cooper told the Financial Times that it could result in banks agreeing loans to meet targets rather than on the merits of applications.

The government is exploring the option of extending targets to all banks, not just ones in which it owns a stake.

There are fears that insufficient bank lending is holding back recovery.

The governor of the Bank of England last week described constrained lending as a “headwind” facing the UK economy.

The government already places gross lending targets on the two banks in which it has a shareholding - Lloyds Banking Group and Royal Bank of Scotland - which they have been meeting.

Some have suggested that these and other non-government supported banks should be subject to the more stringent net targets for lending to small businesses.

On this measure, which takes into account loans being paid off, net lending has typically been flat across the industry.

New targets are reported to be only one of a number of proposals being studied as a means to increase cash flow to small and medium-sized companies.

This was posted in Bdaily's Members' News section by Ruth Mitchell .