The chief executive officers of the UK’s six largest banks set up a task force to examine business lending as they seek to counteract criticism they aren’t supplying enough credit to finance an economic recovery.
The task force will explore how banks can provide more funding for business and aims to report its findings by early October, Stephen Green, who is both chairman of London-based HSBC Holdings PLC and the British Bankers’ Association, wrote in a letter to UK Chancellor of the Exchequer George Osborne.
“We agree with you the essential importance of ensuring that credit is available to viable businesses and particularly for the recovery,” Green wrote in the letter, released yesterday. “A variety of factors have an impact on this, and we recognize the collective role we have to play.”
Politicians and business groups have repeatedly criticized the banks for failing to boost credit after they received government bailouts and guarantees. Criticism of the banks’ failure to lend was fueled last week after all the major UK banks returned to profit for the first time since 2007.
Bank of England Governor Mervyn King said last month that access to credit is “a particular problem” for small and medium-sized businesses. One-third of British firms that applied for credit in the first six months of the year were rejected, according to a report from the Institute of Directors, a business lobby group.
Royal Bank of Scotland Group PLC (RBS) and Lloyds Banking Group PLC failed to meet lending targets agreed with the government last year in return for taxpayer-funded rescues during the credit crisis. The banks say the lending slowdown is largely the result of a drop in demand from borrowers.
Lloyds CEO Eric Daniels said last week in response to criticism that it wasn’t a case of the bank being “mean” and turning customers away. There is a lack of demand because many homeowners and businesses don’t want to take on debt, he said.
The CEOs of RBS, Lloyds, Barclays PLC, Santander UK, Standard Chartered PLC and HSBC will comprise the steering group, BBA spokeswoman Lesley McLeod said.
Green said the task force will work with the UK Treasury, the Bank of England and the Department for Business, Innovation and Skills. The areas covered by the task force will also include trade-finance and business-aid proposals, the letter said.
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