British government tells booming banks to get lending

1st August 2010, Comments 0 comments

British finance minister George Osborne told the country's banks they must use their first-half profits to start lending to businesses again, in an interview out Sunday.

With Britain's top banks preparing to reveal they went back in the black during the first six months of the year, they must get credit flowing, the chancellor of the exchequer told The Sunday Telegraph newspaper.

Osborne said the government "will not tolerate" banks heaping pressure on small and medium-sized businesses and said they had an "economic obligation" to lend.

"Every small and medium-sized company that I have visited in recent weeks has had some problem with their bank -- either they have found it difficult to renew their overdraft or they demanded additional collateral, often someone's house," Osborne said.

"The danger is that, particularly next year, when there is a huge amount of refinancing required, that the small and medium-sized businesses suffer from a lack of access to working capital."

HSBC kicks off the second-quarter earnings season for Britain's banks on Monday, followed by Lloyds Banking Group and Standard Chartered on Wednesday, Barclays on Thursday and Royal Bank of Scotland on Friday.

© 2010 AFP

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