Open SME

4 March 2013 By George Hay Follow @gfhay

British banks trebled usage of the Bank of England’s cheap funding scheme in the fourth quarter, but net lending shrank. The initiative seems to be helping big banks more than small businesses. Politically, it’s embarrassing. Economically, it’s still a good outcome.

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UK banks drew down 9.5 billion pounds from the Bank of England’s so-called Funding for Lending scheme during the fourth quarter of 2012. Their overall drawing is now 13.8 billion pounds.
In the same period, the stock of loans to UK households and non-financial companies declined by 2.4 billion pounds, meaning that lending has declined overall by 1.5 billion pounds since the end of June.
The most recent monthly data for net lending to businesses with a turnover of less than 25 million pounds showed a decline of 292 million pounds in January. The last net monthly increase occurred in August 2011.
Lloyds Banking Group has now taken 3 billion pounds of FLS funding since June, and its lending has declined by 5.6 billion pounds. Royal Bank of Scotland has taken 750 million pounds and its lending has declined by 2.4 billion pounds. Santander has taken 1 billion pounds and its lending has declined by 6.3 billion pounds, while Barclays has taken 6 billion pounds and its lending is up 5.7 billion pounds.

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