Barclays Chief Denies Business Lending Crisis

Fri, 28 Jan 2011

The chief executive of Barclays Bank, Bob Diamond, has denied that UK businesses are suffering from a shortage of bank finance .

Speaking at the World Economic Summit in Davos, Switzerland, Diamond highlighted a back drop of "more optimism" around the global economy and revealed that more than 85 per cent of Barclays’ loan applications from SMEs (small and medium-sized enterprises) are approved.

However, he said that the common perception that business loan applications are rejected is because "one of the nuances that is missed is that the terms are different from lending in 2006 and 2007," before the start of economic downturn.

"Banks are carrying more capital, but demand is down significantly."

Earlier this week, UK manufacturers criticised the UK banking sector for claiming that small businesses are not currently looking for finance .

Attendees at a summit this week, hosted by deputy prime minister Nick Clegg, business secretary Vince Cable and business minister Mark Prisk, were asked by MPs about the ease of obtaining finance, claiming that they had been informed, by the banks, that there was no problem because nobody was seeking finance .

The comments came as a surprise to many, including Rupert Middleton, president of the British Printing Industries Federation (BPIF).

He said: "People were asking who the banks were kidding, claiming that there is no longer a problem. I said that small printers had trouble getting access to finance and it was a problem across the board."

"If banks are using that line, when it is so manifestly not the case, you wonder if they really want to engage. Perhaps they are not able to engage."
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