Lending targets to change
(24 March 2010 – UK) As state-owned banks in Britain struggle to meet their current lending targets, a government source has revealed changes to the way part-nationalised banks will measure lending to businesses.
A government source revealed earlier this week, that as a reflection of companies trying to pay down their debt, lending to businesses will soon be measured in gross terms instead of the government’s existing net targets and new lending targets will also be put in place.
Chancellor Alistair Darling is expected to announce the new targets and measures, to commence in April and be in place for the 2010-2011 financial year, today.
The British government has previously indicated that the Royal Bank of Scotland and Lloyds would be unlikely to meet existing targets for overall lending to businesses due to higher than expected levels of loan repayments as companies shore up their capital base.
If anything next year's target will be more stretching, the source told Reuters.
Reuters also reported that last year the two banks signed agreements to increase their mortgage and business lending in return for the government insuring £585 billion of potentially bad debts.
The Treasury has said it will publish by early April details of the first year of the banks' lending under the agreements.
Chancellor Alistair Darling is expected to announce the new targets and measures, to commence in April and be in place for the 2010-2011 financial year, today.
The British government has previously indicated that the Royal Bank of Scotland and Lloyds would be unlikely to meet existing targets for overall lending to businesses due to higher than expected levels of loan repayments as companies shore up their capital base.
If anything next year's target will be more stretching, the source told Reuters.
Reuters also reported that last year the two banks signed agreements to increase their mortgage and business lending in return for the government insuring £585 billion of potentially bad debts.
The Treasury has said it will publish by early April details of the first year of the banks' lending under the agreements.
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