Back in February the Government decided to require that the UK’s biggest banks – namely Lloyds, RBS, Santander, HSBC and Barclays – to commit to lending £19 billion to small and medium-sized businesses in the first quarter of 2011. The measures were hashed out as a compromise to quell the public outrage at the size of bonus packages being handed out in the city and given the snazzy codename Project Merlin.
Somewhat unsurprisingly, those banks have now missed their lending target by £2.2 billion. The Government has said if banks do not step up their game they will see more taxes imposed on city bonus packages – which was what Project Merlin was originally established to stave off. The banks are blaming the businesses they are supposed to be lending to – saying the lending facilities are in place, they have simply not been used.
Overall lending was on-target, it was only the money earmarked for SMEs that went under-invested – perhaps indicating that small businesses have not yet regained trust in the banking sector as a source of funding.
The only individual bank to meet its lending targets were Santander. A spokesperson said -
“We have pledged to lend £6.7bn to British businesses this year, with £4bn set aside for SMEs. During the first quarter we provided £2 billion of new lending, of which £1.1 billion was for SMEs, keeping us well on track to deliver this commitment.”