More like this
Banks fail to exploit Funding for Lending scheme for good of all
Building societies and banks lend £2.4 billion less despite scheme designed to boost credit
BANKS and building societies lent billions less to individuals and businesses in the last three months of 2012 despite drawing on cheap credit from the Bank of England's Funding for Lending scheme (FLS), according to figures released yesterday.
FLS was launched by the Bank of England and the Treasury in August 2012 as a way to encourage banks to lend by giving them access to £90 billion worth of cheap capital. Despite institutions drawing £9.5 billion from the scheme in the last quarter of 2012, net lending fell by £2.4 billion in the three months to December 2012 compared with the previous quarter, according to the Bank of England statistics.
The Daily Mail notes that Barclays was the only one of the four big retail banks in the scheme to lend more, while state-backed Royal Bank of Scotland (RBS), Santander and Lloyds reduced their lending. Overall, 39 banks and building societies are taking part in the scheme and have borrowed £13.8 billion under FLS since August.
Yesterday's figures were labelled "exceptionally disappointing" by Labour's Treasury spokesman Chris Leslie, while Liberal Democrat peer Lord Oakeshott said "perfectly good businesses" were being starved of funds by banks. "RBS in particular, and Lloyds, have been aggressively shrinking their balance sheets and sucking money out of British business," he told the BBC.
The Bank of England claimed lending would pick up once banks had had time to process recent loan applications, while the Treasury said the scheme had already help reduce borrowing costs for consumers applying for mortgages. ·
