It’s been very hard for small businesses to borrow money of late, so, in attempt to improve this situation, the UK’s six largest banks have joined forces to examine the viability of increasing lending to SMEs. The taskforce, led by Stephen Green, chairman of HSBC and the British Bankers’ Association, will examine potential obstacles to businesses obtaining loans.

With the five biggest banks making more than £15bn of pre-tax profits for the first half of the year, but showing reduced lending figures, the view of Government is that it’s time they started sharing this around, rather than keeping it to themselves.

According to Sharlene Goff of the Financial Times, the banks have long defended the lack of credit growth as a sign of low demand, rather than problems with supply. They say the money is available but that businesses don’t want it, which is at odds with the way the Government, Bank of England and industry bodies see the situation.

The task force, made of the chief executives of Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC, Santander and the Standard Chartered, will assess demand for credit and the scale of challenges for both lenders and businesses.

The issues identified include:
• Loan pricing
• New Basel rules on capital and liquidity
• Looking at options for extending the Government’s Enterprise Finance Guarantee scheme
• The mechanics of a government-sponsored equity fund
• Trade finance

With the taskforce including representatives from the Treasury, Department of Business and the Bank of England, its findings will not rely solely on the banks views. Recommendations will be put forward to the chancellor in early October. The industry also faces scrutiny from the government-appointed Commission on Banking and the Treasury select committee, which is considering whether banks should be broken up and if there is enough competition in the market.