Small business leaders hit out at CBI chief's 'oversensitive' defence of banks

SMALL business leaders have branded CBI director-general Richard Lambert "oversensitive" and "precious" over his claims that bank bashing is deterring new international financial players from entering the UK market.

• Richard Lambert: 'precious'

The broadside from the Federation of Small Businesses (FSB) follows the CBI boss's valedictory speech on banking last week in which he blamed "overheated rhetoric" for frightening off foreign buyers of UK banking assets.

Lambert said the banks, including taxpayer-backed Lloyds Banking Group and Royal Bank of Scotland, had helped trigger the recession but that it was "irresponsible to caricature them as casinos". He said he knew of one foreign financial player that had already pulled back from the idea of entering Britain as a result.

But Stephen Alambritis, head of public affairs at the FSB, the trade body for small and medium-sized businesses, said it was such attacks that had led to the creation of the Independent Commission on Banking. It is hoped the move will free up more lending for small businesses.

Alambritis said: "Lambert is being oversensitive and overly supportive of the big banks, a bit precious. They can look after themselves. Foreign banks won't decide not to enter the UK because of the adverse publicity.

"We have told the coalition government and its predecessor that the FSB would like to see an orderly queue of foreign financial institutions invading the high street.

"Those overseas players know the scale of taxpayer support that was offered to the big four players in small business lending (RBS, Lloyds, Barclays and HSBC]. They are sophisticated enough to know the political sensitivities still involved."

One of the main allegations by politicians, including Business Secretary Vince Cable, is that banks have threatened the economic recovery by not lending enough to SMEs. The FSB has also been a strident critic of a perceived unwillingness to lend. Banks have denied this.

SMEs employ 60 per cent of the private sector workforce - equivalent to 13.5 million people. The FSB said it hoped foreign players like US giants GE Capital and Wells Fargo might follow Spanish banking heavyweight Santander in snapping up British banking assets, including 300 branches from RBS.

Alambritis added: "In fact, quite the opposite to what Lambert and the CBI has said, we believe now is the right time for foreigners to move into the British marketplace."