RBS failing to lend
A committee of MPs have criticised two of the UK's biggest banks for failing to lend enough to homeowners and businesses.
The banks being scrutinised, Royal Bank of Scotland (RBS) and Lloyds Banking Group, are both part-nationalised and have come under fire as the Committee of Public Accounts argues that both institutions would fall short of a pledge to lend a total of GBP£39 billion by the end of February 2010.This commitment, which was legally binding, was made by the two banks in exchange for taxpayer support received in 2008.
Now the committee wants the government to do more so that the banks will be forced to lend.
According to reports by the BBC, Edward Leigh, Chairman of the Committee of Public Accounts, has the bailed out banks' lending performance had caused "widespread dismay."
He added that, "The Treasury does not seem to know why the banks are not lending and has few sanctions available to make them change their minds."
The concern is that the government, which currently has an 84 percent stake in RBS and a 43 percent stake in Lloyds, will fail to force the banks to hit their respective targets.
RBS is committed to lending GBP£25 billion in mortgage and business loans, while Lloyds has pledged to lend GBP£14 billion, however, total taxpayer support for the UK banking sector has now topped GBP£850 billion according to a recent report by the National Audit Office
And, as the BBC reports, Lloyds spokesman Stephen Pegge admitted it was "unlikely" that targets for business lending would be met, saying that there was insufficient demand from companies.
"We are still saying yes to 80 percent of businesses who want to borrow, but there will be some businesses that it will be difficult to provide that extra finance for," he said instead.
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