Feb. 13 (Bloomberg) -- U.K. Treasury minister Mark Hoban said figures showing banks missed their target on new lending to small and medium-sized businesses were “disappointing.”
While Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, HSBC Holdings Plc, Barclays Plc and Santander U.K. collectively lent 214.9 billion pounds ($339.6 billion) to business, beating a target agreed with the government by 13 percent, they lent 74.9 billion pounds to small and medium-sized companies, defined as those with revenue of less than 25 million pounds annually. That amounted to 98.6 percent of the amount pledged under the so-called Project Merlin deal of 2011.
“It is disappointing that lending to small and medium- sized businesses did miss the target by a billion pounds, but let’s not forget banks lent 9 billion pounds more to small- and medium-sized businesses in 2011 than 2010,” Hoban said in an interview with Bloomberg Television today.
The agreement lasted for 2011 and will not be extended, Chancellor of the Exchequer George Osborne said in November. The government will guarantee 20 billion pounds of lending to businesses with revenue of 50 million pounds or less, in the next two years, Osborne said.
“The news that the lending targets for small- and medium- sized businesses set under Project Merlin have been missed will add insult to injury for firms struggling to get the finance they need to survive and expand,” Chuka Umunna, the opposition Labour Party’s business spokesman, said in an e-mailed statement.
The five lenders promised the government last year to provide gross new credit of 190 billion pounds to businesses, including 76 billion pounds to smaller firms. Businesses should be encouraged to consider alternative financing to bank loans, such as equity raisings, Hoban said.
Prime Minister David Cameron’s spokesman, Steve Field, said: “The world changed in the middle of last year. These targets were set at the beginning of last year.”
--With assistance from Robert Hutton in London. Editors: Francis Harris, Eddie Buckle
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