British banks reduce Q1 loans
2013-06-04 17:42:46
Loans issued by British banks to businesses and home buyers dropped by 300 million pounds in the first quarter of this year despite the government's efforts to boost lending for economic recovery.
The Bank of England, the central bank, issued data on the government-launched Funding for Lending Scheme (FLS) on Monday, saying that the net quarterly flows of lending by FLS participants to British households and businesses fell by 300 million pounds (457 million U.S. dollars) in the first quarter, while the central bank got extra funds amounting to 2.6 billion pounds from 13 FLS participants, adding the total for the scheme to 16.5 billion pounds.
"The picture of flat lending growth overall is broadly as expected at this stage reflecting reductions in some legacy portfolios being roughly offset in aggregate by expanding new lending, said Paul Fisher, Executive Director for Markets at the Bank of England.
"The plans of the FLS participants suggest that net lending volumes will pick up gradually through the remainder of 2013."
The FLS scheme, jointly launched by the central bank and the Treasury last August, was designed to boost the economy as the government believed the scheme involving 80 billion pounds would be a huge help for the British economy.
Up to now, 40 banks and building societies have participated in the scheme, which cover over 80 percent of the stock of lending to the real economy.
The scheme has made mortgages and loans cheaper and more easily available, providing support to businesses that want to expand and families aspiring to own their home.
The cental bank's figures also show that 27 out of 40 participating groups increased their lending in the first quarter.
Lloyds Banking Group, one of the FLS participants, said in a statement that its lending to small and medium-size enterprises (SMEs) had increased by 4 percent annually.
It pledged to increase new lending to the first time home buyers to 6.5 billion pounds in 2013 compared to 6 billion pounds last year.
The bank has committed 18.4 billion pounds in gross new lending since it launched the FLS offers for businesses and homeowners in September last year through to end of the first quarter.
Last month, the central bank and the ministry of finance announced an extension to the FLS. The extension is made to give banks and building societies confidence that funding for lending to the real economy will be available on reasonable terms until January 2015.
Also, it aims to increase the incentive for banks to lend to SMEs both this year and next; and to include lending involving certain non-bank providers of credit, which play an important role in providing finance to the real economy.