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News - 6 August 2013

Banks Accused of 'Despicable' Lack of Lending

Lawrence Tomlinson, entrepreneur in residence at the Department for Business, Innovation and Skills (BIS), has provided the Business Secretary with claims of alleged misconduct towards companies by the lenders, including the government-backed Royal Bank of Scotland and Lloyds Banking Group.

Mr Tomlinson said he was aware of cases in which businesses were deterred from accessing finance before even being given the chance to apply.
"The behaviour we have uncovered has been pretty despicable really, we have seen peoples' businesses and peoples' livelihoods being destroyed, rather than being supported, by banks."

Responding to the report, RBS, which is about 80% owned by the taxpayer, said it was the largest lender to small and medium-sized enterprises (SMEs) in the UK.

"We have established an independent review of our lending standards and practices to identify steps we can take to support even more SMEs and play our part in securing the economic recovery," it added.

Lloyds Banking Group, nearly 40% held by taxpayers, said it is growing lending to SMEs, adding: "Our net lending growth is 5% year-on-year, even though it has been falling by 3% across the banking industry. We are accepting eight out of 10 applications for finance."

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“Since the financial crisis, banks have had to put more cash aside to meet tougher safety demands by regulators. This has partly constrained the amount of capital they have been willing to lend to individuals and small and medium-sized firms. However, latest figures suggest the lending squeeze may be lifting.”

The Bank of England says lending to small businesses rose by £238m between May and June - the biggest monthly rise since the data was first recorded in 2011.

If you need any help and advice for your business on financing, cash-flow, management accounts, business development or any other business related matter contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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