Banks should provide more loans
Banks are being slated for not lending enough and to target, especially the part-nationalised RBS and Lloyds.
This was emphasised by the Chancellor’s budget report this week that RBS and Lloyds would specifically have to lend more in order to support consumers and business.
While interest rates with the Bank of England remain at historic lows, banks have not simply been lending less, but have also ensured fat margins on what they do lend, in order to help improve their profitability.
Budget 2010: Bailed out banks to lend more to businesses
In a legally binding agreement, RBS and Lloyds, which are 84% and 41% owned by the taxpayer respectively, were rescued at the height of the financial crisis but there have been concerns that the bailed out banks have not helped small businesses through the economic downturn.
The two banks have lent a combined gross total of £76 billion to businesses. However, the economic outlook has meant customers have been cautious and have therefore, repaid debt more quickly.
Consequently, the banks have not hit their combined net lending target of £27 billion to businesses.
As a result, the two banks have been told to up their lending targets.
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