FSB slams Barclays' reluctance to accept lend targets

THE Scottish head of the Federation of Small Businesses yesterday hit out at Barclays bank for refusing to accept the UK government's lending targets.

A spokesman said the decision would worsen Britain's "choppy" economic recovery referred to this week by the governor of the Bank of England, Mervyn King.

Colin Borland, the FSB's public affairs manager for Scotland, said: "Lending targets are meaningless if no-one adheres to them and there are no real penalties for the institutions failing to support the real economy."

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Borland said the FSB believed that "developing real competition in small business banking needs to be the priority for the Westminster government".

Barclays recently broadened the remit of its business bank to include companies with turnover up to 5m rather than 1m.

But Steve Cooper, head of Barclays small business division who oversees lending to 750,000 small and medium-sized companies, was reported as saying: "I'm not going to sign up to a target. I don't want to create an expectation that if Barclays said no yesterday it could say yes tomorrow (because it has a target to achieve]."

Cooper said small businesses were on average paying an extra 1 per cent for loans than before the financial crisis, but riskier customers were paying up to 5 per cent more for new loans.

Borland commented: "Of course cost will reflect risk, but there is still some distance between our understanding of a sound proposition and the definition employed by certain big banks".