Lloyds pledges cash for start-ups

Nov 11 2009 by jez Davison, Evening Gazette

BUSINESS leaders have welcomed a pledge by Lloyds Banking Group to help 300,000 new start-ups in the next three years.

The move comes as the bank, which is 43% owned by the taxpayer, yesterday announced plans to shelve 5,000 UK jobs across its insurance, group operations and retail divisions.

Lloyds said it did not know how the latest round of cuts would affect Teesside. The banking giant, which employs around 300 locally, has already axed around 10,000 jobs since taking over HBOS at the end of last year.

Under its new charter, Lloyds has promised to increase access to finance and provide more competitive pricing for business customers.

The move comes amid criticism of banks for hoarding spare cash to repair their balance sheets while reining in lending to cash-strapped businesses. Recent figures from the British Bankers’ Association (BBA) showed that new lending to small firms fell from £867m in June to £574m in August.

Local business leaders gave a cautious thumbs-up to the charter, claiming that access to credit was still a major issue for some Teesside businesses.

Ross Smith, of the North East Chamber of Commerce (NECC), said the scheme could help restore business confidence, although companies would still have to demonstrate a robust business plan to benefit from bank funds.

The Federation of Small Businesses (FSB) said it was pleasing that small businesses had “finally entered the banks’ radar for assistance”.

Pauline Osborne, new FSB regional chair for the North-east, said: “I and my fellow activists will be watching developments closely to ensure this is not merely a PR stunt on the part of Lloyds bank and the charter is actually obtaining tangible results.”

Lloyds, which has already pledged to lend an extra £11bn a year to businesses in return for taxpayer aid, said it would run a programme of 200 seminars to advise small firms, meet “reasonable” requests for finance and help viable businesses through temporary difficulties.

TWO banks not involved in the Government’s multi-billion pound bail-out scheme have reported a hike in profits due to strong investment banking performances and an improving picture for bad debt charges.

Yesterday, Barclays reported third quarter pre-tax profits of £1.56bn - a result that analysts predict could put it on track for record annual profits of up to £11bn.

Meanwhile HSBC’s bad debts fell to their lowest level for more than a year as the bank reported underlying third quarter profits “significantly ahead” of a year earlier.