THE UK’s banks missed targets for lending to smaller businesses in 2011 by more than £1bn, but exceeded the overall lending target in Project Merlin.
The five banks – Lloyds Banking Group, Royal Bank of Scotland, Santander, Barclays and HSBC – loaned £74.9m to small and medium-sized enterprises (SMEs) in 2011, the British Bankers’ Association said.
They had agreed with the Government in the Project Merlin talks to make £76bn of lending available.
However, the banks loaned a total £214.9bn to UK businesses, exceeding their target of £190bn.
It is understood that RBS, which is 83% owned by the taxpayer, is the culprit for the shortfall in SME lending although it will not report its performance until full-year results later this month.
The BBA said the overall lending figure demonstrated the banks’ commitment to help UK businesses and pointed to Bank of England data that showed SMEs’ demand for credit had fallen in three out of the last four quarters.
A spokesman for the Merlin banks said: “The banks’ efforts to encourage customers to come forward with borrowing proposals are set against this overall challenging economic environment. The business demand for credit remains weak.”
But the failure to hit targets will re-ignite the row over banking lending amid large pay-outs to staff.
