Part-nationalised banks agree extra lending

Part-nationalised banks have pledged £94 billion in extra loans for struggling businesses in the coming year, the Chancellor said today.

Alistair Darling said Royal Bank of Scotland and Lloyds Banking Group have agreed to lend nearly half the total amount to smaller companies.



RBS, which is 84% taxpayer-owned, said its deal with the Government involved extending £50 billion in gross lending to firms.









Lloyds has agreed to lend £44 billion to firms in the coming year under the new agreement.

The revised lending arrangements mean targets for loans to firms will be measured in gross terms, which do not include repayment levels.



Last year the banks missed their required business lending levels as recession-hit customers looked to repay debt.



Both banks comfortably met their mortgage lending targets in the last 12 months however and these will continue to be measured in net terms.



Lloyds' target will remain at £3 billion for the coming year, while RBS has seen its commitment reduce to £8 billion, as the target was balanced over two years after the 2009 level was increased from £9 billion to £10 billion.



The Budget document said that the new agreements were legally binding but stopped short of outlining specific penalties if the banks failed to comply.



It said if the banks were judged not to have met their targets, UK Financial Investments (UKFI) - the body charged with managing Government banking stakes - would "work with the remuneration committees of the relevant banks to determine the appropriate consequences".



The Treasury said business lending across the economy has been more subdued than mortgage activity as banks and customers reassessed risk, while uncertainty over the economy reduced demand for finance.



According to the Budget document repayments for corporate loans in 2009 were £19 billion greater than the total level of new lending.



"There is evidence that large businesses, have, in particular, been using money they raised from capital markets to repay bank lending," it said.



RBS committed to lend an extra £25 billion in the 12 months from March 2009 on a net basis - with £16 billion in loans to firms.



Meanwhile, 41% State-owned Lloyds agreed to lend £14 billion over the year in return for its bail-out, including £11 billion to companies.



RBS lent a gross £41.4 billion to businesses in the period, but cautious businesses looking to clear debt left it with a net repayment of £6.2 billion.



Lloyds handed out £38.3 billion to firms, but its net figure also undershot the target at £5.7 billion.



RBS and Lloyds achieved mortgage lending of £12.7 billion and £4.4 billion respectively after repayments are taken into account.



RBS chairman Philip Hampton today said the bank had the capital to make the new lending available to customers.



"The right amount of debt for business will be greatly influenced by the pace of economic recovery," he said.



"We are committed to ensuring our credit worthy personal and business customers can access the funding they require."



Lloyds said it would play an "active part in the UK's economy" through its lending.



"We will also maintain our extensive participation in the wide range of Government schemes designed to support lending to businesses and homeowners," the bank said.



"We are committed to helping our customers through these challenging times."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
Jihadi John
newsMonikers like 'Jihadi John' make the grim sound glamorous
Arts and Entertainment
As depicted in Disney's Robin Hood, King John was cowardly, cruel, avaricious and incompetent
film
Life and Style
Travis Kalanick, the co-founder of Uber, is now worth $5.3bn
tech
Extras
indybest
2015 General Election
May2015

Poll of Polls

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 General

Circles South East Youth Service: Youth Services Volunteer

this is an unpaid voluntary position: Circles South East Youth Service: LOOKIN...

Recruitment Genius: Business Development Executive - OTE £30,000+

£18000 - £22000 per annum: Recruitment Genius: This leading privately owned sp...

Recruitment Genius: Software Developer

£30000 - £40000 per annum: Recruitment Genius: A Software Developer is require...

Recruitment Genius: Logistics Supervisor

£24000 - £27000 per annum: Recruitment Genius: The largest supplier to the UK'...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn