Thursday, October 14, 2010

Superior Gold Group - UK banks to create 1.5 billion-pound business fund

Britain's six largest banks will start a 1.5 billion-pound ($2.4 billion) fund to help smaller companies to get financing after the government threatened to curb bonuses unless firms boost lending.

HSBC Holdings Plc, Barclays Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, Standard Chartered Plc and Banco Santander SA's UK unit will contribute to the fund "over a number of years," according to a report to be published on Wednesday. Executives from the banks will meet Chancellor of the Exchequer George Osborne and Business Secretary Vince Cable on Wednesday to present the Business Growth Fund report, a person familiar with the situation said on October 5.

The move follows pressure from business lobby groups and politicians urging banks to increase lending after accepting more than 1 trillion pounds in bailouts and guarantees during the financial crisis. Osborne said last week he would block the payment of large bonuses unless banks show they are extending credit to households and companies.

"This won't touch the real needs of small businesses," said Stephen Alambritis, a spokesman for the Federation of Small Businesses, which represents 215,000 entrepreneurs. "It is a drop in the ocean compared to what small businesses need from the banks."

The UK's largest banks may pay 7 billion pounds in bonuses to staff in the financial industry this year, the Centre for Economics & Business Research Ltd said. The banks will enable companies seeking to reorganize debts to have a "dialogue" with their lenders 12 months before the scheduled date of refinancing.