Darling's surprise

24 March 2010 By George Hay Follow @gfhay

The statedominated UK banks have been ordered to increase gross loans to British businesses by 18 percent this year. The targets look achievable. But the creation of a new body to review lending decisions is a reminder that RBS and Lloyds remain hamstrung compared to peers.

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The UK government is to require Lloyds Banking Group and Royal Bank of Scotland to make 94 billion pounds of new gross loans to UK businesses in the 12 months from March 2010, the chancellor Alistair Darling revealed in his budget.

RBS will be required to provide 50 billion pounds of new gross lending, compared to 41.4 billion pounds last year. Lloyds will have to lend 44 billion pounds, compared to 38.3 billion pounds in 2009/10.

Darling expects about half of this new lending to be to small businesses. Last year, the two banks lent a gross 38 billion pounds to the sector.

The new targets come after both RBS and Lloyds failed to meet targets for net lending to UK businesses imposed as part of the government bailout of the two banks.

The government also announced the creation of Small Business Credit Adjudicator, which will have statutory powers to ensure that SMEs are treated fairly when applying for bank finance.

Reuters graphics:

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Darling expects about half of this new lending to be to small businesses. Last year, the two banks lent a gross 38 billion pounds to the sector.

The new targets come after both RBS and Lloyds failed to meet targets for net lending to UK businesses imposed as part of the government bailout of the two banks.

The government also announced the creation of Small Business Credit Adjudicator, which will have statutory powers to ensure that SMEs are treated fairly when applying for bank finance.

Reuters graphics:

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