Banks Still Not Lending!
The figures are the first insight into the success of the Government and the Bank’s much-hyped ‘Funding for Lending’ scheme, aimed at solving Britain’s lending crisis.
One expert yesterday joked the name was ‘unintentionally ironic’ because there is ‘precious little lending going on.’ Under the scheme, banks and building societies can borrow an unlimited amount of money for as little as 0.25 per cent as long as they maintain, or increase, their lending.
They must use the money to lend to the real economy, such as small firms and homeowners or first-time buyers who need a mortgage.
The figures, published yesterday by the Bank of England, show a total of £4.36billion was borrowed between the launch of the scheme on 1 August and the end of September.
But net lending - the total amount handed out to families and firms, excluding the amount paid back - rose by a paltry £496million during the three months to the end of September.
To make matters worse, the Bank’s figures show some of the worst culprits are the banks which needed taxpayers’ money to survive the financial crisis.
Yesterday the Bank insisted it is too early to judge the success of the scheme, while banks insisted their figures are distorted by the offloading of toxic loans made during the boom years.
RBS said net lending increased by £412million to businesses and households between July and September, but said the figure published by the Bank was distorted by the offloading of its toxic debts.