Nick Clegg recently urged banks to ramp up lending to SMEs. Image courtesy of: World Economic Forum/Flickr.com
Nick Clegg recently encouraged banks to stop “sitting on their hands” and ramp up lending to small businesses.
The Deputy Prime Minister, who was speaking to members of the Cardiff Business Club
in Wales, said that last year’s Government banking reforms were designed to create a competitive banking system rather than allow the continued domination of the high-street heavyweights.
He said the reforms were designed to prevent the financial crash of 2008 reoccurring, and offered a chance for banks to: “Get the balance right.”
“I read time and time again that firms are desperate for loans and in my view there is simply no excuse for turning down applications
made by good businesses,” said Clegg.
“There are questions we need to ask – how much capital are banks devoting to their business lending compared to their trading operations? How much are they distributing to their share holders or top executives compared to business?"
“My message to banks is quite simply this: yes of course get your balance sheets in order, meet the new capital requirements, but don’t lurch to the other extreme at the expense of lending."
“Don’t sit on your hands while firms are crying out for cash
and understand that supporting good business is in your interest too."
“A prospering banking system needs a growing economy as much as everything else.”
Clegg added that the Government is in a good position to exert pressure on the big banks, and will soon invest £100m in alternative finance schemes, such as private sector participation (PSP).