"Financing projects from £50,000 to £100 million"

Government responds to RBS debacle with plans for its Business Bank

Government responds to RBS debacle with plans for its Business Bank

The Government has reacted to allegations concerning the state-owned RBS by revealing further investment plans for the new state-run Business Bank.

The new Business Bank is expected to receive a boost of £250 million, improving its investment funds up to £1.25 billion, while a permanent base for it will also be established in Sheffield.

Eyebrows will doubtlessly be raised at the location, as Deputy Prime Minister Nick Clegg and Business Secretary Vince Cable – both Liberals – announce plans for the new bank’s headquarters in Mr Clegg’s constituency.

But the news is likely to be welcomed by business and enterprise groups as a further demonstration of the commitment to small business lending.

The Business Secretary is expected to state the case for additional resources in order to solve “long-term problems in our banking system”.

Recent evidence of such problems was uncovered recently, as businessman Lawrence Tomlinson’s report accused the Royal Bank of Scotland of plotting the downfall of some of its business customers to profit from their demise.

Mr Tomlinson said that the bank had forced “good and viable” firms out of business, only to profit from their distress “by squeezing them for exorbitant fees and charges and ultimately seizing their assets to swell its own vast property empire”.

The assets made available through property development firms were of particular interest to the state-backed bank, figures suggest, with the ‘West Register’ portfolio run by the bank’s global restructuring group generating £276 million from these alone.

The case has been passed onto the Financial Conduct Authority for investigation.

But the new Business Bank is not the only positive measure on the cards for small businesses.

The Bank of England has also announced that the focus of the Funding for Lending Scheme will be redirected towards business lending from January 2014.

It will be hoped that the measures begin to lift optimism among SMEs, who remain broadly pessimistic about their chances of success if they apply for credit.

Monday, 02 December 2013 16:11
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