Nov. 23 (Bloomberg) -- Lloyds Banking Group Plc, Britain’s second-biggest publicly owned lender, pledged to provide 12 billion pounds ($19 billion) of loans for small- and medium- sized firms next year as the government pushes banks to boost lending.
The commitment marks an increase on the bank’s so-called Merlin agreement with the government to bolster lending, the London-based bank said in a statement today. The company said it will also keep net lending, the difference between loans drawn and repaid, positive.
“There are no caps and no quotas: we will simply lend where the money is needed and will go beyond our commitment if the demand is there,” John Maltby, director of commercial banking, said in the statement. “‘We hope that this pledge proves to be the confidence boost that will help to kick start real growth.”
Regulators and governments are trying to stop lenders from cutting loans to small and medium-sized businesses, threatening economic growth, as the industry cuts debt to meet capital and liquidity targets. The U.K. economy grew 0.5 percent in the third quarter and the Confederation of British Industry said this month growth may stall in the final three months of 2011.
Lloyds said it lent 9.6 billion pounds to small- and medium-sized companies in the first nine months of this year as the industry’s net lending levels declined.
Britain’s five biggest banks agreed with the government in February to provide gross new credit of 190 billion pounds to businesses this year from 179 billion pounds in 2010 under the so-called Project Merlin arrangement.
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