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Project Merlin: Banks lend £5.7bn more to business in Q2

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  • 12/08/2011
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UK banks increased lending to business to £53bn in Q2 after promising to lend £190bn or more to meet demand this year.

Commercial lending rose by £5.7bn from £47.3bn in Q1, after major banks agreed back in February they had a “capacity and willingness” to lend £190bn of new credit to business in 2011.

As part of Project Merlin, small and medium-sized businesses have been earmarked for £76bn of the total and banks agreed to publish their gross lending figures to allow monitoring on a quarterly basis.

The major banks involved in Project Merlin include Barclays, HSBC, Lloyds Banking Group, RBS and Santander.

However, the Federation of Small Businesses (FSB) said this commitment from the banking industry fails to address the problems created when a handful of banks control the majority of the market.

John Walker, FSB national chairman, said: “In a recent FSB member survey, of the 20 per cent of small firms that had applied for credit in the 12 months to June, a third had been refused. This has meant that growth opportunities have been missed or delayed for many businesses.”

The trade body said the Independent Commission on Banking must be bold in its recommendations to Government in September to ensure more competition in the banking sector.

“With global economic and financial fears, it should not be about meeting targets but about genuinely helping businesses start-up, grow and invest to help to put the UK recovery onto firmer ground,” he said.

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