By Billy MacInnes
The UK's big six banks have established a taskforce to look at the issue of providing finance to businesses even though they continue to claim companies have become less willing to seek loans.
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The chairman of HSBC, Stephen Green, has written to the chancellor George Osborne, to provide an update on the taskforce and the topics it plans to cover. The letter coincided with the banks reporting combined profits of more than £15bn just as it emerged there had been an increase of nearly 120% in complaints from small businesses about their bank loans or overdrafts.
According to figures from the Financial Ombudsman Service (FOS), obtained by new bank Aldermore, which was set up to lend to small business, there were 496 complaints in the year to the end of March compared to 226 in 2009.
Aldermore CEO Philip Monks said small businesses felt "betrayed" by banks that refused to renew their loan facility, adding: "The big banks aren't happy to admit it but their balance sheets are under strain and they are having to knock back perfectly good customers."
Despite denials by the big banks of a deliberate policy of cutting back on lending to business, Bank Of England figures show net lending to UK businesses fell by over £3bn in the first quarter and gross lending has fallen nearly 40% to £26,5bn.
"Personally we think it is time that banks started taking care of SMEs," Morris said. "They make a lot of money out of SMEs they should show them some loyalty. When an SME's loan comes up for renewal, maybe the banks should see that as an opportunity to help, not just a one off chance to extract the juiciest fees they can before the customer faints!"
In his letter to Osborne, Green said one of the objectives was to "share best practice on how banks can provide better information, advice and support to smaller and medium sized businesses through the recovery phase of the cycle".
The taskforce is also looking at the actions required to ensure mid-market companies (with a turnover of £10m to £100m) have access to finance through the recovery.