Newspaper article The Evening Standard (London, England)

Biggest Bail-Out Puts Pressure on Banks to Lend Again; Bail-Out Bank Chiefs Agree to Mini Clampdown on Bonuses; Anger of Small Businesses Facing 'Arm and a Leg' Struggle for Loans

Newspaper article The Evening Standard (London, England)

Biggest Bail-Out Puts Pressure on Banks to Lend Again; Bail-Out Bank Chiefs Agree to Mini Clampdown on Bonuses; Anger of Small Businesses Facing 'Arm and a Leg' Struggle for Loans

Article excerpt

Byline: Joe Murphy and Hugo Duncan

THE biggest bail-out yet of British banks was agreed today despite evidence that small firms are still being denied the credit they desperately need to survive the recession.

Royal Bank of Scotland and Lloyds will get up to [pounds sterling]40billion in a restructuring and aid package unveiled by the banks and the Treasury today.

Taxpayers could plough as much as [pounds sterling]33.5 billion into RBS and [pounds sterling]5.7 billion into Lloyds. The [pounds sterling]39.2 billion total exposure exceeds the [pounds sterling]37 billion offered just over a year ago in the emergency action to stop them collapsing at the height of the financial crisis.

Yet the City Minister, Lord Myners, was unable to say whether the pair of rescued banks were honouring their pledge to resume lending to struggling firms and families.

At a Treasury briefing on today's rescue, he said only: "I have no reason to believe Lloyds and RBS are any less supportive of small business clients than Nationwide, HSBC or Barclays. Remember, if we had not stepped in to support them, they would not be there to support small businesses."

He said figures on lending would not be presented to Parliament before spring.

Lloyds and RBS agreed to a small restriction of bonuses to try to assuage public anger that huge amounts were being poured into the banks again just as the bonus culture was revived.

However, Stephen Alambritis, chief spokesman of the Federation of Small Businesses, said: "Small businesses are still struggling to get loans. The banks are asking for an arm and a leg and the process is tortuous and elongated."

The Shadow Chancellor, George Osborne, said: "The Government is having to put another [pounds sterling]39.2billion of taxpayers' money into the banks. Yet still there is no guarantee that it will get credit flowing in the economy."

Vince Cable, Liberal Democrat Treasury spokesman, added: "The banks want it all their own way. There must be no question of Lloyds and RBS running away from their lending agreements.

They owe their existence to the taxpayer. …

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