Barclays says no to meeting loan targets set by government

According to a recently published report, UK banking industry giant Barclays will not be signing up to any lending targets instituted by the Coalition government in order to discourage irresponsible personal and business loan approvals.

Head of Barclays‘ small business division Steve Cooper commented to the Financial Times recently that he will not be committing to any government mandated targets because he wants to discourage any expectations of the bank approving loans on Fridays after turning them down on Thursdays just to reach an arbitrary loan target.

At a time when sights have firmly been set on recovery efforts in the financial community, Barclays’ decision comes hot on the heels of a recent announcement of increased profits; the bank reported that their profit figures had risen by 44 per cent.

Barclays, one of only a handful of large UK banks not to receive a government handout at the inception of the banking crisis, reported that, before taxes, it made £3.95 billion in the first half of 2010, 44 per cent higher than it made during the same period of time the previous year.

Barclay’s main competitiors for market share, RBS and Lloyds Banking Group, have committed themselves to the government’s lending targets; however both financial institutions are partially owned by the government due to the taxpayer funds used to bail both of them out.

Meanwhile, Mr Cooper made additional comments regarding Barclays’ decision, stating that the current price of lending is reflected by recent shifts of its risk profile.  The cost to borrow cash has risen, he said, which requires banks to hold larger amounts of capital in order to secure the loans.

Mr Cooper was quick to add that one third of new business loans to UK small business bank accounts in 2010 have been provided by Barclays, which actually was in excess of its total loan share of 17 per cent.

In a related story, six of the UK’s largest biggest banking institutions announced recently that a joint taskforce is to be established in order to examine the current shortage in regards to business loans.

Stephen Green, chairman of the British Bankers’ Association, sent a letter to Chancellor Osborne which said that the need to ensure that businesses that likely to succeed obtain the financial support is an important facet of the UK economy’s recovery efforts.

Mr Green elaborated on the design of the taskforce, stating that it will be examining ways to aid banks in their efforts to bring business landing numbers back up.

Planning to present findings in October to the Chancellor, the group is composed of BIS, the Treasury, and also the BoE in addition to the BBA.

© 2021 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.

Tags: , , , ,