Big Banks cut Lending while taking the Funding-for-Lending Cash
Bank lending dropped by £2.7bn in the last quarter of 2012 according to recent data from the Bank of England. This is despite the government's efforts to extend cheap money to the banks via the Funding for Lending Scheme (FLS). Alarmingly, Lloyds, Santander and RBS/Nat West all reined in business and mortgage loans.
Lloyds for example has taken £3bn from FLS since last summer but has reduced the value of its loan book by some £5.6bn. Meanwhile, RBS/Nat West has reduced its loan book by £2.3bn since the lending scheme began. And Santander has cut its loans by £6.3bn despite having taken £1bn from FLS.
The big five high street banks account for 90% of lending in the UK, and with three of them cutting funding on such a scale, hopes for economic growth led by the private sector will be dented.
Interestingly, the big 3 cutters contrast starkly with building societies such as Nationwide (lending up by £3bn after taking £2bn through FLS) and our own Coventry Building Society (lending up nearly £1bn after taking just £100m from FLS). They also contrast with Barclays which upped lending by £6bn on the back of £5.7bn of FLS money (HSBC hasn't participated in the scheme).
Full figures on the FLS can be seen here
What is especially worrying is that the two state-owned banks (Lloyds and RBS/Nat West) cut lending so much. Analysts will no doubt argue that it's a demand side issue (that can't be so if Barclays and many building societies are increasing lending) or that the hard-up banks are under pressure to strengthen their financial positions.
But such trends yet again raise questions over the government's whole approach. After the failure of Project Merlin and credit easing, FLS was meant to get money out of banks into small firms. Yet recent figures showed net lending to businesses falling by £4.5bn in the last quarter of 2012 (the last quarter is a weak period for lending to firms but even so this is a poor result).
Actually there is very little evidence that FLS is doing very much to help small firms. What it may be doing is getting money into the mortgage market so may eventually have a role in driving up house prices. This isn't how FLS was 'sold' by the government as a way of driving business lending and economic recovery.
In that sense, FLS fits the recent pattern of government interventions very well - it's yet another half-baked effort to fix the problem of zombie banks. And since FLS we've also had the announcement of yet another attempted fix in the form of the 'British Business Bank'.
With the Bank of England at least thinking about undertaking more QE, how about doing something more imaginative, with new QE money going into the new Bank rather than the current big banks which are failing to deliver on lending to small firms?
It might also help the Chancellor who has boxed himself into a spending corner. He has so far been unwilling to boost demand, whether in a direct way through temporary and targeted tax cuts or more spending on infrastructure, or indirectly by capitalising at a decent level a fully-fledged new Business Bank aimed at lending to small firms.
Instead he is left fiddling around at the edges, desperately trying to find ways to boost growth without extra spending, through schemes such as FLS.
It's not working.
Professor David Bailey works at Coventry University Business School
Older/Newer
« Goodbye Triple A. Hello Triple Dip? | Reflecting on Dr. Beeching's legacy »
51 Comments
Leave a comment
Business authors
David Bailey - Prof David Bailey, Coventry University Business School
My postings |
My feed
Stuart Pemble - Construction Lawyer, Mills & Reeve
My postings |
My feed
John Clancy - Birmingham City Councillor and director of mediafuturesalert.com and justliteracy.com
My postings |
My feed
John Samuels - Professor of Business Finance, Birmingham Business School
My postings |
My feed
Chris Tomlinson - Chris Tomlinson is the founder of social media and online PR agency Friend (frienddigital.com)
My postings |
My feed
Andrew Whitehead - Senior partner at law firm SGH Martineau, leading the firm's Energy & Climate Change practice.
My postings |
My feed
Keith Gabriel - A Birmingham-based PR Account Manager
My postings |
My feed
Beverley Nielsen - Lecturer, Design Management, at the Birmingham Institute of Art & Design, BCU
My postings |
My feed
Mike Loftus - Director of News from the Future Ltd. Writing on the trials of setting up your own business
My postings | My feed
Richard Halstead - Midlands region director for EEF, the manufacturers organisation.
My postings | My feed
Karl Edge - partner at KPMG in Birmingham, specialising in automotive, manufacturing and house building sectors.
My postings | My feed
Peter Owen - Managing director for construction firm Willmott Dixon Midlands.
My postings | My feed
Dr Steven McCabe - director of research degrees for Birmingham City Business School.
My postings | My feed
Francis Greene - Professor of Small Business and Entrepreneurship, at the University of Birmingham.
My postings
Alan Gilmour - Director at Cogent Elliott, experienced in marketing, brand development and customer relationship management.
My postings
Paul Noon - Paul Noon, OBE, West Midlands International Trade Director at UK Trade & Investment.
My postings
Latest Birmingham Post News blog
Birmingham Post staff and guest bloggers from the midlands give you their opinions on local and national news.
Latest Birmingham Post Lifestyle blog
Birmingham Post staff and guest bloggers from the midlands give you the lowdown on what's happening in your region and some musings on culture in the UK and beyond.
Latest Birmingham Post Science blog
Birmingham Post staff and guest bloggers from Birmingham and the midlands inform and entertain on all science matters.
Latest Birmingham Post Sport blog
Birmingham Post staff and guest bloggers from Birmingham and the midlands inform and entertain on all sporting matters.
Are you delving deep enough?
The figures are for households and Private Non-Financial Companies. Thus you are not getting PLCs in there. That is why you have banks as big lenders and that the Big 4 are responsible for 90% of lending. In the real world they aren't.
So why the LTSB reduction? Is it that they are more a retail bank and households are de-gearing?
I wouldn't be worried about a 1.3% fall in Lloyds lending book. Its profitability that matters.
Hi John
Big PLCs sitting on piles of cash (£700bn in fact) - though they are not investing it due to the lack of confidence.
As for SMEs, recent data from the British Bankers’ Association shows conditions in Q4 2102 worse than a year before. New loans to small businesses fell to £1.5bn in the fourth quarter of 2012, against £1.6bn in Q4 2011.
Re medium sized firms, loans here fell to £3.6bn, down from £4.1bn.
Overall, as the FT noted recently, the annual rate of growth in the stock of lending to UK businesses – which historically averages 5-6%, has been around zero since 2009.
Whichever way you look at it, this is pretty dismal.
regards
Dave
My family every time say that I am killing my time here at web, however I know I am getting know-how every day by
reading thes pleasant posts.
Awesome things here. I'm very satisfied to look your post. Thank you a lot and I'm taking a look forward to contact you.
Will you kindly drop me a e-mail?
This is really interesting, You are a very skilled blogger.
I have joined your feed and look forward to seeking more of
your fantastic post. Also, I have shared your site in my social networks!
Great web site. Lots of helpful info here.
I am sending it to several buddies ans also sharing in delicious.
And obviously, thank you for your effort!
Hi! I've been reading your website for a long time now and finally got the bravery to go ahead and give you a shout out from Atascocita Texas! Just wanted to mention keep up the good job!
Very quickly this site will be famous amid all blog
users, due to it's nice articles
Now then! This is my first visit to your blog!
We are a collection of volunteers and starting a new project in a community in the same niche.
Your blog provided us beneficial information
to work on. You have done a extraordinary job!
Currently it seems like Movable Type is the top blogging platform out there right now.
(from what I've read) Is that what you're using on your blog?
Excellent goods from you, man. I have understand your stuff previous to and you are just too wonderful.
I really like what you have acquired here, certainly like what you are saying and the way in which you
say it. You make it entertaining and you still take care of
to keep it wise. I cant wait to read much more from you.
This is really a terrific web site.
It's not my first time to pay a quick visit this website, i am visiting this website dailly and take fastidious facts from here everyday.
You are looking for how you would list that, an on the
internet home loan, a new expression personal loan, a payday loan or maybe
money advance, we all yet pleased to help tell
you that many of us complete the task beautifully. the key
reason why? As you keep in mind that oftentimes it might be very rough along with there are occasions when one does want a bundle instantly,
generally an identical working day. It is is the reason why
all of us say that people give salaryday rapidly borrowing products and even all of us never check out credit scores.
Yes, pay attention. Even in the event your credit
ratings is usually hardly ideal, we are able to supply an individual some profit.
A lot of our work would be to give you the bucks in just 1 day not to mention in most cases you will
need less enough time to practice it (it depends onto your traditional bank, not necessarily usa).
And then the best thing - you don't need to that provides how come you will need revenue. Feel free to use that while you need. We tend to care about any provicy. You don't need to convey you and me reasons how come you'll need bucks.
Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest twitter updates.
I've been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.
Thanks for every other informative website.
Where else may I get that type of info written in such an ideal approach?
I've a project that I'm simply now running on, and I have
been on the glance out for such information.
Rash to assume the agency of sexual selection, and when no direct evidence?
Hey are using Wordpress for your blog platform?
I'm new to the blog world but I'm trying to get started and
set up my own. Do you need any html coding knowledge to make your own blog?
Any help would be greatly appreciated!
I really like what you guys tend to be up too. This sort of clever work and exposure!
Keep up the superb works guys I've included you guys to my personal blogroll.
Greetings! Very helpful advice in this particular article! It's the little changes which will make the most significant changes. Thanks for sharing!
An interesting discussion is worth comment. I think that you should publish more on this subject
matter, it might not be a taboo subject but usually people do not talk about such subjects.
To the next! Best wishes!!
It is really a well-known idea that should you have piled up a piggy
bank, you will not have to fall back on utilizing an online cash advance loan when a lot of costs come at
you at once. In this situation quick unemployed loans can be helpful to
fix your troubles.
Thank you for the good writeup. It in fact
was a amusement account it. Look advanced to far added agreeable from you!
By the way, how could we communicate?
wonderful points altogether, you simply gained a emblem new reader.
What might you recommend about your post that you just made a few days ago?
Any positive?
I'm no longer positive where you're getting your
information, however great topic. I must
spend a while learning more or figuring out more.
Thanks for fantastic information I used to be in search of
this information for my mission.
This page truly has all of the information and facts I wanted
about this subject and didn't know who to ask.
Thanks a bunch for sharing this with all folks you really recognize what
you're speaking approximately! Bookmarked. Please additionally talk over with my web site =). We will have a hyperlink exchange agreement among us
I have not located what I needed strona firmowa
hello there and thank you for your information – I have
definitely picked up anything new from right here. I did however
expertise a few technical issues using this site, since I experienced to reload the site lots of times previous to I could get it to load properly.
I had been wondering if your hosting is OK? Not that I'm complaining, but sluggish loading instances times will sometimes affect your placement in google and could damage your high quality score if advertising and marketing with Adwords. Well I am adding this RSS to my email and can look out for a lot more of your respective intriguing content. Ensure that you update this again very soon.
Great work! This is the kind of information that should be shared
across the internet. Shame on Google for not positioning
this put up higher! Come on over and discuss with my
site . Thanks =)
Now was the time to reward yourself with a whole new color scheme.
A modernized version of Moroccan style is popular in
feng shui Home Security that ought to impact an individual's decision to purchase a new door for your desired effect and exposure.
This victorian style kitchen is very country complete with the expected dock mode that includes an alarm clock,
radio set, OLED display, along with other personal
property to settle an estate. MapsThough it's not quite as integrated as you think, though -- bookmark this page yes, this article is called easy home invasion projects, yes, this one feels impressively light.
hello!,I like your writing so a lot! proportion we communicate extra approximately your article on
AOL? I require an expert in this area to resolve my
problem. Maybe that's you! Looking forward to peer you.
Horoscope humour temporel voyance
Incredible points. Solid arguments. Keep up the great effort.
La sodomie entre hommes sex porno film
Les gros sex videos porno simpson
I am not sure where you're getting your information, but good topic. I needs to spend some time learning more or understanding more. Thanks for magnificent information I was looking for this info for my mission.
Great article.
Whoa! Many thanks! Truth just like the just one single an individual stated below are going to be convenient to me!. I adore guides in addition to utilized to check out bookshops frequently. My partner and i purely check out your site. This particular posts will be great in addition to We've by now utilized to check out this great web site frequently. A great just one single.
Very shortly this web site will be famous among all blogging people, due to it's pleasant content
I've been absent for some time, but now I remember why I used to love this web site. Thank you, I’ll try and check back more often. How frequently you update your site? artbaby.com.pl http://pentaki.pl/firmy/producent,ubranek,dla,dzieci,s,4620/
This really is providing this lots of content usually are overt on this creating as well as using the weapon expended relationship within individuals content and something instance construe this kind of amount it is possible to certainly not recede this kind of facts on this creating. Cheers lots pertaining to business the town marrow on this creating.
What's up to every body, it's my first pay a quick visit of this
web site; this weblog contains amazing and actually fine information in
favor of visitors.
Remarkable! Its really awesome piece of writing, I have got much clear idea on the topic of from this article.
Incredible story there. What occurred after? Take care!
Every weekend i used to go to see this web site, for the
reason that i wish for enjoyment, as this this web site conations actually pleasant funny material too.
Hello There. I found your blog the usage of msn.
This is a very smartly written article. I will be sure to bookmark it and come back to read more
of your helpful info. Thank you for the post.
I'll definitely return.
Voyances gratuites en ligne lion astrologique
Good website! I truly love how it is easy on my eyes and the data are well written. I'm wondering how I could be notified when a new post has been made. I've subscribed to your RSS which must do the trick! Have a great day! rowery kross http://uderzaj.com.pl/sklepy,internetowe/banaszek,duda,company,rowery,dzieciece,s,1510/
Valuable info. Lucky me I found your site accidentally, and I am shocked why this twist of fate didn't happened earlier! I bookmarked it. Roben dachówka Kraków http://deluiss.com.pl/e-biznes/5198/
Great beat ! I wish to apprentice while you amend your site,
how could i subscribe for a blog website? The account helped me
a acceptable deal. I had been tiny bit acquainted of this
your broadcast provided bright clear concept