Lloyds' lending to manufacturers to top one billion pounds

LONDON Mon Apr 1, 2013 12:06am BST

A customer is seen entering a branch of a Lloyds TSB bank in southwest London in this June 30, 2011 file photograph. REUTERS/Luke MacGregor

A customer is seen entering a branch of a Lloyds TSB bank in southwest London in this June 30, 2011 file photograph.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - Britain's biggest retail bank Lloyds said on Monday it was on course to beat its own target of lending 1 billion pounds to UK manufacturers before September 2013.

Lloyds, which is 39 percent owned by the British government, said it had lent 700 million pounds to manufacturers in the past six months, following the launch of its 'Manufacturing Commitment' last September.

"We have already seen a great appetite from manufacturing businesses that want to invest and expand even in these uncertain times," David Oldfield, head of SME and mid-market banking at Lloyds, said in a statement.

Lloyds is using the Bank of England's flagship Funding for Lending (FLS) scheme to offer firms a 1 percent reduction in the interest rate for new business loans. The offer applies for the full term of the loan and to businesses of all sizes.

The scheme was launched by the central bank and finance ministry last June to aid growth by offering banks cheap funds if they stepped up lending to home-buyers and small and medium-sized businesses.

However, it has failed to stop an overall decline in bank loans. Although banks and building societies have drawn down almost 14 billion pounds of cheap central bank funds, net lending has gone into reverse. In the last three months of 2012, Lloyds' cumulative net lending fell by 3.1 billion pounds.

Like other British banks, Lloyds is under pressure from parliamentarians to increase lending but faces a difficult juggling act as it must also strengthen its financial position to meet tougher demands from regulators.

(Reporting by Matt Scuffham; Editing by Catherine Evans)

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Comments (3)
GlobalFamily21 wrote:
Banks have to come up with their own liberal lending policies to real investors and the Government should give monetary and moral support, with proper control and regulations, then our economy will boost up.

Apr 01, 2013 11:41am BST  --  Report as abuse
farmerrobin wrote:
well there’s a surprise, a bank lending money; that’s what they’re supposed to do isn’t it? take in deposits, pay a reasonable interest to the depositors and then lend it out at a reasonable margin to borrowers, preferably ones they know are capable of turning a profit, safely, with the money; this, as opposed to gambling, mis-selling, defrauding or any of the other little scams used by the banks over the years to feather their own nests with scant regard for anyone else.

Apr 01, 2013 12:23pm BST  --  Report as abuse
finchley wrote:
David Oldfield should get a bonus for lending to the manufacturing sector. The investment bankers don’t need any bonuses. The reduction in overall lending is probably due to a reduction in lending on investment banking projects which serve the economy no good at all.
Are we finally moving in the right direction?

Apr 03, 2013 9:45am BST  --  Report as abuse
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