Big five banks miss SME lending target

Figures published by the Bank of England today have revealed that the “big five” banks loaned £16.8 billion to SMEs in the first quarter – around £2 billion short of the £19 billion target – agreed under the “Project Merlin”.

Under the agreement, Project Merlin, Barclays, Royal Bank of Scotland, Lloyds, HSBC and Santander all committed to lend £190 billion to all businesses this year.

Of this figure, around £76 billion of credit should be made available to SMEs this year – equating to around £19 billion every quarter.

In response, the banks said targets were missed due to weak demand from small businesses as a result of the weak economic recovery.

However, the Project Merlin agreement includes a clause that if banks do not meet lending commitments, chief executives will not be able to receive their maximum pay and bonus.

Last year, banks loaned £179 billion to businesses.