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New banking deal for small firms collapses

ATTEMPTS by the coalition government to reach an agreement with the UK’s biggest banks on the amount they lend to small businesses have stalled, according to the BBC.

The plan, known as Project Merlin, was reportedly expected to have resulted in an announcement this week, but negotiations will now continue.

About £200bn in loans to firms was to have been made available in 2011.

The stumbling block is thought to have concerned governance issues.

Bank bosses argue that lending targets for what might be weaker businesses could breach rules that say any decision should be in the best interest of shareholders.

They also say the banks’ ability to lend to companies and consumers may be restricted if some of the ideas from the Independent Commission on Banking (ICB) set up by the government are implemented.

This was posted in Bdaily's Members' News section by Ruth Mitchell .