Banks To Increase Business Lending

Fri, 24 Apr 2009

UK businesses will receive financial support from banks over the coming months, according to the Bank of England .

In its recently published Trends in Lending report, the BoE revealed that gross new lending to businesses reached £12 billion in March, compared with £9 billion in February.

However, the Bank stressed the increase did not suggest that Britain’s cash-strapped banks were beginning to lend again, as the majority of the loans being made were refinancings, debt restructurings or the rolling over of existing loans to corporate customers as opposed to new loans .

The BoE report combines its own data with additional information from six major lenders - Banco Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide and Royal Bank of Scotland .

Separate figures released by the BoE showed the year-on-year growth rate in lending to UK businesses was 5.7 per cent in February, down from the annual growth rate of 8 per cent in January and the 9.1 per cent rate recorded in December.

But despite the figures, the Bank said it remained confident that business lending would improve.

"Growth in the stock of lending to UK businesses slowed markedly during 2008 but, looking ahead, some lenders expect the overall availability of credit to the corporate sector to increase over the next three months," the report said.
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