Banks are set to come under renewed pressure from the government to increase lending to small firms. Business Secretary Vince Cable says banks are "not acting in the national interest" and measures may be needed. He has suggested dividends and bonuses could be a target as part of a "carrot and stick" approach to boost lending.
Mr Cable is due to unveil a joint consultation paper with the Treasury containing options to improve cash flow to businesses. Under the proposals, banks could be made to sign up to the same type of lending agreements placed on the part-nationalised RBS and Lloyds. These include penalties on executive remuneration for failures to boost lending.
In a Sunday Times interview, Mr Cable said: "We are very worried about the behaviour of the banks. They are not acting in the national interest. I don't think they get it. At the moment we are talking to them in an amicable way and we are monitoring them, but if this doesn't work there are combinations of carrots and sticks that can be employed and they are under no illusions about that - and we are not either."
A spokesperson for the British Bankers’ Association said, “Demand for lending is currently low as businesses are not keen to take on additional borrowing when the economic outcome is uncertain”
Other options due to be outlined by Mr Cable include proposals for regional stock exchanges in cities such as Birmingham and Edinburgh and more government loan guarantees. The banking industry, meanwhile, maintain that lending to smaller firms is stable while it is rising among larger companies.
APA will be following these announcements closely and engaging with Mr Cable to ensure they best fit the needs of business; especially small business.
APA
Source: BBC News
Mr Cable is due to unveil a joint consultation paper with the Treasury containing options to improve cash flow to businesses. Under the proposals, banks could be made to sign up to the same type of lending agreements placed on the part-nationalised RBS and Lloyds. These include penalties on executive remuneration for failures to boost lending.
In a Sunday Times interview, Mr Cable said: "We are very worried about the behaviour of the banks. They are not acting in the national interest. I don't think they get it. At the moment we are talking to them in an amicable way and we are monitoring them, but if this doesn't work there are combinations of carrots and sticks that can be employed and they are under no illusions about that - and we are not either."
A spokesperson for the British Bankers’ Association said, “Demand for lending is currently low as businesses are not keen to take on additional borrowing when the economic outcome is uncertain”
Other options due to be outlined by Mr Cable include proposals for regional stock exchanges in cities such as Birmingham and Edinburgh and more government loan guarantees. The banking industry, meanwhile, maintain that lending to smaller firms is stable while it is rising among larger companies.
APA will be following these announcements closely and engaging with Mr Cable to ensure they best fit the needs of business; especially small business.
APA
Source: BBC News
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