Lloyds Banking Group and Nationwide have driven the largest increase in quarterly lending since the Bank of England launched its Funding for Lending Scheme more than a year ago.
The two lenders made £5.8bn of net new loans in the three months to the end of September, more than three times the £1.6bn the previous quarter and helping offset a net fall in lending by other major banks during the period.
Despite the increase, net lending to small and medium sized businesses fell over the third quarter as companies paid down their debts faster than banks could make new loans.
Paul Fisher, executive director for markets at the Bank of England, said lending to SMEs had been “subdued” and showed why the scheme needed to be refocused on smaller businesses.
Last week, the Treasury and the Bank confirmed that from next year FLS support will only be available for lenders to make loans to SMEs and that it would no longer be used to support mortgage lending.
Steve Radley, policy director at manufacturers’ lobby group EEF, said the figures showed the decision to restructure FLS was “the right one”.
“With lending still weak, we shouldn’t see this as the silver bullet and we need action in all fronts to get credit flowing, including increasing competition in business banking and, improving the relationship between business and banks,” he said.
The British Bankers’ Association (BBA) highlighted the 8pc increase in SME cash deposits as part of the reason for the net fall.
“Firms are borrowing more and paying off more existing debts as well as building up cash reserves. The missing piece of the jigsaw is business investment, which we expect to recover as confidence in the broader economic outlook improves,” said Richard Woolhouse, chief economist at the BBA.
Over its life, FLS has supported a £3.6bn increase in net lending since June 2012, with banks drawing down a total of £23.1bn since its launch.
The increase represents a 0.3pc increase on the base stock of loans at the scheme’s inception.
Nationwide has made the biggest net contribution to lending since the scheme began, making net new loans of £9.8bn, while Barclays made the second most loans of £6.7bn.
The biggest net decrease in lending has come from Santander and Royal Bank of Scotland, which has shrunk their loan books by £12.6bn and £6.5bn respectively.
telegraph.co.uk
The two lenders made £5.8bn of net new loans in the three months to the end of September, more than three times the £1.6bn the previous quarter and helping offset a net fall in lending by other major banks during the period.
Despite the increase, net lending to small and medium sized businesses fell over the third quarter as companies paid down their debts faster than banks could make new loans.
Paul Fisher, executive director for markets at the Bank of England, said lending to SMEs had been “subdued” and showed why the scheme needed to be refocused on smaller businesses.
Last week, the Treasury and the Bank confirmed that from next year FLS support will only be available for lenders to make loans to SMEs and that it would no longer be used to support mortgage lending.
Steve Radley, policy director at manufacturers’ lobby group EEF, said the figures showed the decision to restructure FLS was “the right one”.
“With lending still weak, we shouldn’t see this as the silver bullet and we need action in all fronts to get credit flowing, including increasing competition in business banking and, improving the relationship between business and banks,” he said.
The British Bankers’ Association (BBA) highlighted the 8pc increase in SME cash deposits as part of the reason for the net fall.
“Firms are borrowing more and paying off more existing debts as well as building up cash reserves. The missing piece of the jigsaw is business investment, which we expect to recover as confidence in the broader economic outlook improves,” said Richard Woolhouse, chief economist at the BBA.
Over its life, FLS has supported a £3.6bn increase in net lending since June 2012, with banks drawing down a total of £23.1bn since its launch.
The increase represents a 0.3pc increase on the base stock of loans at the scheme’s inception.
Nationwide has made the biggest net contribution to lending since the scheme began, making net new loans of £9.8bn, while Barclays made the second most loans of £6.7bn.
The biggest net decrease in lending has come from Santander and Royal Bank of Scotland, which has shrunk their loan books by £12.6bn and £6.5bn respectively.
telegraph.co.uk
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