Barclays rejects Government lending targets

| August 13, 2010 | 0 Comments

According to a report in the Financial Times, British banking giant Barclays has refused to sign up to Government lending targets, suggesting they could encourage irresponsible lending.

Steve Cooper, head of Barclays’ small business division, told the FT: “I’m not going to sign up to a target. I don’t want to create an expectation that if Barclays said no on Thursday it could say yes on Friday [because it has a target to achieve].”

The move comes at a time when the banking industry has its sights firmly set on recovery after recently announcing higher profits.

Barclays recently reported a 44% rise in profits. The bank, which is one of the few not to have received any financial help from the Government, said pre-tax profits came in at £3.95 billion for the six months to the end of June – a rise of 44% on the same period last year.

Its rivals, Lloyds Banking Group and Royal Bank of Scotland, have already agreed to lending targets, but both banks are part-owned by the taxpayer.

In the meantime, Mr Cooper also said: “There has been a real shift in risk profile, which is reflected in the price.

“Also, the cost of borrowing has gone up materially and banks are having to hold a lot more capital,” he added.

Mr Cooper added that Barclays had already provided up to almost one third of new lending to UK SMEs this year - exceeding its 17% share of total loans.

In related news, it was announced earlier this week that the bosses of Britain’s top six banks are to establish a taskforce to address the shortage of lending to businesses.

In a letter to Chancellor George Osborne, British Bankers’ Association (BBA) chairman, Stephen Green, said there was a “need to make sure that viable businesses are able to obtain the finance they need to support the recovery of the UK economy”.

Mr Green, who is also chairman of HSBC, said the taskforce is designed to help get lending to businesses back on track.

The group, which will also include members from the Treasury, BIS and the Bank of England, will present their response to Mr Osborne in October.

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