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Banks' report aims to blunt lending row
06 September 2010
Britain's six biggest banks have commissioned a report to profile the creditworthiness of their business customers in a bid to break the deadlock with the Government over lending levels. The banks, which include the Royal Bank of Scotland and Barclays, have agreed to pay pH, a subsidiary of Experian, the research company, to analyse the credit profiles of small businesses that are being refused funding. The data, which will be gathered over the next month and presented to the Treasury in October, will be used by the banks in an attempt to convince the Government not to intervene to force them to lend more to businesses. Mervyn King, Governor of the Bank of England, has talked about the "heartbreaking" sight of so many UK businesses going under because of lack of credit. Britain's Federation of Small Businesses says 300 to 400 of its members are collapsing every week. But the banks have said that lending figures are down due to lack of demand and only risky companies are being turned away. Vince Cable, the Business Secretary, has accused the banks and businesses of engaging in a "dialogue of the deaf" over lending. He warned that he is prepared to use both "sticks and carrots" to break the deadlock. Last month, the banks formed a task force under the umbrella of the British Bankers Association (BBA) which pledged to deliver a detailed report on business lending to the Chancellor by October. The task force, headed by Stephen Green, the chairman of HSBC, had hoped to collect the evidence themselves, but insiders said the growing hostility towards the banks had led to the decision to pay for independent analysis. One source said: "The research will cost but so far the banks' presentations on business lending simply aren't being believed. Independent research is clearly needed to establish credibility." The six banks have commissioned the work from Experian to be co-ordinated through the BBA. The BBA confirmed the plans to The Daily Telegraph in a statement: "As part of the work of its task force on small business lending, the BBA and its members have commissioned detailed research to provide a clear picture of lending to small businesses throughout the UK. The results will be included in the final report to be presented to the Chancellor of the Exchequer in October." Published by The Telegraph
