Banks behind on SME lending target

 

The UK's top banks were nearly £1 billion behind their Project Merlin target for lending to small businesses at the end of September, official figures revealed today.

Barclays, Royal Bank of Scotland, Lloyds Banking Group, HSBC and Santander UK lent £56.1 billion to small and medium enterprises (SMEs) in the first nine months of the year, the Bank of England said.

Under the Project Merlin agreement the banks said they would increase lending to SMEs to £76 billion this year, which equates to £19 billion in the first quarter, or £57 billion by the end of the third quarter.

However, the banks are on course to beat the target of £190 billion for gross lending to all businesses, including SMEs, after extending £157 billion in the first nine months of the year.

Terry Scuoler, chief executive of EEF, the manufacturers' organisation, said it was concerning that the target for SMEs, who face the most difficulties accessing finance, is not quite being met.

The Merlin agreement, unveiled in February, followed protracted talks between the top five banks and the Treasury over key issues such as bonuses and lending.

After the Bank published today's figures, Business Secretary Vince Cable said: "Today's figures show that while there is still much work to do, positive progress is being made on the quantity of bank lending available to businesses and they are on track to deliver more this year than before.

"It is vitally important to our economy that small firms can get access to the finance they need. The banks have agreed to lend £76 billion to small and medium-sized enterprises this year and I will be monitoring their performance against this target particularly closely."

The UK's top five banks all provided third quarter trading updates in the last four weeks and all said they were on course to meet the Merlin targets.

Santander UK said it had lent £3.19 billion to SMEs in the first nine months, while Barclays extended £11 billion in credit, RBS £30.7 billion, and Lloyds handed out £9.6 billion. HSBC said it was £38 million off its Merlin targets so far this year but did not give the total figure.

A spokesman for the Merlin banks said: "The Merlin banks are on track to meet their business lending commitments.

"The first nine months performance demonstrates the banks' commitment to providing businesses with the financial support they need to invest and grow and the significant progress made since February this year. However, the overall economic environment remains challenging and business demand remains weak."

John Walker, national chairman for the Federation of Small Businesses, said the Merlin targets did not address underlying problems in the banking sector and called on the Chancellor to make good on his proposal to introduce credit easing.

He said: "These targets are politically driven and don't address the lack of competition in the sector, as the main five banks control around 85% of the small business banking market.

"We need to see a clear change - more competition and new lines of credit opening for small firms if they are to help boost the recovery."

The Chancellor first unveiled plans to inject billions of pounds into UK business through a credit easing programme at the Conservative party conference in October.

The move would see the Government buy bonds issued by companies to provide much-needed finance for businesses struggling to secure loans on favourable terms from the banks and was seen by some as an admission that the Project Merlin lending agreements had failed.

PA

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Arts and Entertainment
Jamie Oliver
filmTV chef Jamie Oliver turned down role in The Hobbit
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
tvReview: Top Gear team flee Patagonia as Christmas special reaches its climax in the style of Butch and Sundance
News
people
Sport
Ashley Barnes of Burnley scores their second goal
footballMan City vs Burnley match report
Arts and Entertainment
Peter Mayhew as Chewbacca alongside Harrison Ford's Han Solo in 'Star Wars'
film
News
i100
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Tracy Emin's 1998 piece 'My Bed' on display at Christie's
artOne expert claims she did not
News
Ernesto Che Guevara and Fidel Castro, right, met at Havana Golf Club in 1962 to mock the game
newsFidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
News
Hackers revealed Oscar-winning actress Lawrence was paid less than her male co-stars in American Hustle
people
Arts and Entertainment
Clueless? Locked-door mysteries are the ultimate manifestation of the cerebral detective story
booksAs a new collection of the genre’s best is published, its editor explains the rules of engagement
Sport
Robin van Persie is blocked by Hugo Lloris
footballTottenham vs Manchester United match report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?