Darling to meet banks about borrowing costs

By Avril Ormsby

LONDON (Reuters) - Chancellor Alistair Darling is expected to meet with some of the major banks on Monday to express his concern at borrowing costs, especially for small and medium-sized companies.

He is expected to ask banks individually about lending levels and credit charges after figures appeared to show borrowing costs are going up when interest rates are at record lows.

"I am extremely concerned at what the banks are doing for the small and medium-sized companies," he told the Andrew Marr show on Sunday, when asked if he was likely to be calling in the banks the following day.

"What companies are being charged does seem to have gone up relative to what banks are actually having to pay because of the fact that we have very low interest rates," he said.

He said the government had not pumped billions of pounds of taxpayers' money into the banks, preventing a near collapse of the financial system, as "some sort of charitable act" but in an attempt to keep the economy moving.

The government is a major shareholder in two of the country's biggest banks, Lloyds and Royal Bank of Scotland.

He said he wanted banks to rebuild their balance sheets, "but at the same time because of the particular circumstances we are in now ... we also need them to lend money."

"That is why we recapitalised them to do that. That means they have got to live up to the promises they made.