Barclays rejects small business lending targets

The head of Barclays’ small business unit has said he will refuse to join any future government scheme that sets targets for lending to small firms.
Steve Cooper told the Financial Times that such a programme could result in irresponsible lending. He said it may mean banks agreeing loans to meet targets rather than on the merits of applications.

The government is exploring industry-wide business lending targets for banks, but no decision has been made. Instead it is currently only one of a number of proposals being studied as a means to increase cash flow to small and medium-sized companies.

Ideas also being analysed in the Financing A Private Sector Recovery green paper include encouraging venture capital and so-called business angels to invest more widely.

Business Secretary Vince Cable has also suggested that bank dividends and bonuses could be a target as part of a “carrot and stick” approach to boost lending.

A spokesman for the Department of Business, Innovation and Skills said it was “crucial for the recovery that small businesses are able to access the finance they need”.

“As set out in the green paper we are exploring all areas, including bank lending,” he added. “The government is working with the banks and looking to the industry to provide the solutions. If that does not materialise we will consider other options.”

The government already places business lending targets on the two banks in which it has a shareholding – Lloyds Banking Group and Royal Bank of Scotland.

However, analysts have questioned whether it would be possible to extend compulsory targets to banks that remain independent, such as Barclays and HSBC.

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