Mortgage News
Cable: Banks to face higher financial penalties on lending
Vince Cable, business secretary, warned banks will be hit with greater financial penalties unless they increase their lending levels.
He said they would be heading for a “train crash” if they award large bonuses while small businesses struggle to get credit, the Telegraph reports.
Cable suggested the government could take tougher steps – including an increase in the banking levy imposed on the larger banks in the Budget, which is due to raise £8bn over the next five years.
Asked at a fringe meeting at the Liberal Democrat conference what he could do to boost lending rates, Cable said: “We spelt out that there were what we called sticks and carrots.
“One of the sticks is in relation to tax measures. It remains an option, particularly if the banks decide to spray out lots of money on bonuses and dividends at a time when small businesses are being starved, then the case for taking action is a compelling one.”
His comments coincided with data from the Bank of England showing lending to businesses fell for a fifth consecutive month in July. There was a £2.5bn fall in net lending to businesses during the month, compared with a £3.2bn fall in June.
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