13th October 2008
Under a rescue deal announced this morning, three of the UK's biggest banks will be obliged to lend to small businesses at 2007 levels.
The Government is injecting £37 billion of capital into HBOS, Lloyds TSB and The Royal Bank of Scotland in an emergency move to restore confidence in the banking system. As part of the agreement, the banks must maintain for three years the "availability and active marketing of competitively-priced lending to homeowners and to small businesses at 2007 levels".
BBC Business Editor Robert Peston said that it was "perhaps the most extraordinary day in British banking history".
The commitment to small business lending has been welcomed by business groups. Phil McCabe, spokesperson for the Forum of Private Business (FPB), said: "Like homebuyers, the small business community will welcome the announcement that they are to benefit from the Government's decision to re-capitalize the banks.
"We are hearing more from our members about credit restrictions, and also problems such as late payment are being magnified because of the economic downturn. It is therefore pleasing that the Government is making it clear that funding streams for small firms must be preserved as part of this agreement."
IMAGE Johnny Green/PA Wire
Rescued banks forced to up small business lending
The Government is injecting £37 billion of capital into HBOS, Lloyds TSB and The Royal Bank of Scotland in an emergency move to restore confidence in the banking system. As part of the agreement, the banks must maintain for three years the "availability and active marketing of competitively-priced lending to homeowners and to small businesses at 2007 levels".
BBC Business Editor Robert Peston said that it was "perhaps the most extraordinary day in British banking history".
The commitment to small business lending has been welcomed by business groups. Phil McCabe, spokesperson for the Forum of Private Business (FPB), said: "Like homebuyers, the small business community will welcome the announcement that they are to benefit from the Government's decision to re-capitalize the banks.
"We are hearing more from our members about credit restrictions, and also problems such as late payment are being magnified because of the economic downturn. It is therefore pleasing that the Government is making it clear that funding streams for small firms must be preserved as part of this agreement."
IMAGE Johnny Green/PA Wire
Tags: Office, Regulations
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