project merlin

Government-backed Bank Lending to Small Firms Plummets

Bank lending to small businesses under the Government’s Enterprise Finance Guarantee (EFG) scheme has fallen by 42 per cent in the past 12 months, new figures have revealed. Research from financial services group Syscap found that the total value of loans offered to small firms under the EFG scheme fell from £742 million to £433 million in the 12 months to 30 June 2011. The EFG scheme was introduced by the Government in 2009 with a target of lending £1.3 billion to viable businesses with a turnover of up to £25 million. Under the terms of the scheme, banks are advised to lend to businesses they would be happy to lend to commercially, regardless of the guarantee from the Government. Syscap’s research found that just £93.1 million was made available ... »

Bank Lending Improving in the Manufacturing Sector

Bank lending to manufacturing firms improved in April and May for the first time since the end of the recession, manufacturing organisation the EEF has said. The EEF survey of 500 small manufacturing firms found that the same number of businesses reported a rise in bank lending in April and May, as reported a fall. In comparison, in February and March more firms saw a drop in access to credit than an increase. The findings come despite reports that UK banks are failing to deliver on their lending targets to small firms under the Project Merlin agreement (PDF). Recent figures from the Bank of England (BoE) highlighted that the top five UK banks loaned £16.8 billion to small firms in the first three months of 2011 ? despite a target of £19 billion per quarter under Project Merlin... »

Project Merlin Fall Short of Small Business Bank Lending

A £2.2 billion shortfall in bank lending to small businesses is expected to be announced by the Bank of England next week. Under Project Merlin (PDF), Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Santander UK pledged to lend about £190 billion to businesses in 2011. This included £76 billion earmarked for small business — or £19 billion a quarter. However, reports have suggested that only around £16.8 billion was lent to small firms during the first quarter of the agreement. “Without sufficient demand from small businesses, the targets won’t be met and are unenforceable.” said Federation of Small Businesses (FSB) national chairman, John Walker. “Small businesses have said that it’s the cost of finance that has put them off... »

Peer Resigns Over Small Business Banking Deal

After yesterday’s announcement by Chancellor George Osbourne that the Project Merlin talks had finally come to a satisfactory conclusion, Lib Dem peer, Lord Oakeshott, stepped down from his place in the front benches. The banking deal, announced after Prime Minister’s Questions yesterday, sees Britain’s "big four" banks increasing lending from £179bn to £190bn with the promise that small business lending will increase (from £66bn to £76bn), bonuses at banks will be restrained and there will be greater transparency in the pay system at the UK’s top financial institutions, some of them seen as being "propped up" by UK taxpayers. However, Lord Oakeshott, the Treasury Spokesman in the House of Lords, branded the deal as "pitiful" and quippe... »

Project Merlin: Business Lending Hasn’t Stalled

The Government has denied reports that negotiations with the UK’s main banks to improve lending to small firms have stalled. As previously reported (Small Business Lending Deal Stalls) the banks have apparently delayed an agreement to lend £200 billion to small businesses in 2011. Reports claim that bank bosses have argued that the lending target is not in the best interest of their shareholders. However, the Department for Business, Innovation & Skills (BIS) denied that the banks were holding out on the discussions, known as “Project Merlin”, saying no lending targets had yet been agreed. “Absolutely nothing has been agreed – the banks haven’t stalled.” said BIS spokesman, Miles Erwin. “The banks have made a proposal on lending and we’re discussing this with them. &l... »

Small Business Bank Lending Deal Stalls

A deal between the coalition government and the UK’s top banks on lending to small businesses has stalled, according to a report by the BBC. "Project Merlin" was supposed to see Britain’s four biggest banks (RBS, Barclays, HSBC and Lloyds) increase lending to small business with bankers showing restraint in the payment of bonuses, particularly at Royal Bank of Scotland and Lloyds which are 84% and 41% "taxpayer owned" respectively. The deal was expected to be confirmed in the forthcoming week with lending to SMEs to increase by around 10% in 2011. The total of small business lending was estimated to be in the region of £200bn and it was anticipated that the government might be lenient on banking bonuses if the big four were to simply increase business lendin... »