The 2013/02/13 at 08:05
Stéphanie Salti, à Londres
Despite endless appeals to public authorities and organisations overseeing businesses, the level of loans made to enterprises has not budged by one inch. On the contrary, according to statistics published by the Bank of England on 21 January, loans made to businesses shrank by 2.8 billion pounds in November, and some 6.4 billion pounds over a one-year period. In other words, it is impossible for businesses to support their investment and expansion projects. The decline of British credit is no new thing, and dates back to the start of the country’s financial crisis in 2007.
The government under David Cameron has nonetheless multiplied initiatives to make up for this constant lack of credit: there was first the Project Merlin, urging the country’s five main banks (Barclays, HSBC, RBS, Lloyds and Santander UK) to grant 190 billion pounds in new loans to enterprises in 2011, including 76 billion to SMEs. Failing to meet success, the experiment was cut short, opening the way for the introduction of a new credit-easing initiative at the end of November 2011. In June 2012, the Bank of England and the British Treasury came up with a new project, known as the Funding for Lending Scheme (FLS), aimed at getting bank establishments to widen loan access by borrowing from the Bank of England, for a period of four years, up to the equivalent of 5 % of the funds they currently lend, in other words, a total of some 80 billion pounds. In exchange for this low-cost financing, participating banks pay yearly interest of 0.25 % on the amount they borrow, but must maintain or increase their level of loans to enterprises and individuals.
While the scheme does not seem to foster loans to enterprises, it nevertheless appears to yield conclusive results for access to real-estate loans for households. According to statistics published by the Bank of England at the end of December, the number of real-estate loans granted climbed more than expected to 55,800 in December, in other words the highest level since January 2012, but still half of the figures recorded prior to the financial crisis. The latest idea to date is that of a Business Bank functioning like a public investment bank, endowed with one billion pounds, not be created until 2014. “A public investment bank in good and due form is useful for introducing fundamental changes in financing for enterprises and for providing necessary support to viable and developing enterprises, which will bring us back on the path to growth,” comments John Longworth, Director General of the BCC.
Pending the introduction of this new system, the Secretary of State for Business, Vince Cable, has asked British banks to provide details on bank loans granted to enterprises, branch by branch, to single out the poorest lenders. In a speech made on 6 February 2013 before an audience of financiers, the Secretary of State for Business brandished the threat of new regulations if banks, nonetheless claiming not to have such information at their disposal, fail to conform to this requirement. Vince Cable finds it “pathetic” that financial establishments claim not to find any creditworthy business customers around. He believes that part of the problem resides in the big banks having “got rid of real talent in business banking”. He points out that banking whizzes have been heading to Canary Wharf or the City rather than seeing themselves “as a commercial relationship manager out in the sticks”.
Finally, the Secretary of State for Business intends to ask the Central Bank of England whether the Funding for Lending Scheme could be redirected to better meet the needs of SMEs. What remains to be seen is whether the latest measures will have a sufficient impact on British enterprises.