Desperately seeking more lending funds
Posted on February 15th 2010
This time last year I wrote a number of articles about the fact that the £billions of pounds being pumped into our banks would not find its way back to homeowners and businesses. Last week my view was confirmed (to an extent) in that both Lloyds and RBS confirmed that they are failing to hit their lending targets. This is despite the fact that part of the deal in bailing them out was that they would lend an agreed amount to homeowners and businesses. It is a pretty lame excuse citing a lack of demand as the reason these targets were missed.
My view remains unaltered, there simply is not enough money in the system to fuel the scale of our lending demands. Deposit takers lending activities are restricted by the continuing lack of wholesale funding coming into the UK and their credit criteria confirms the fact that their lending appetite is still borderline anorexic.
With the Spring just around the corner we are likely to see a rise in activity from both businesses and potential homebuyers but I fear that lending numbers will not increase, one can only try and guess what excuse the banks will come up with for missing another target, certainly the ‘lack of demand’ excuse won’t wash. What we need is some new money entering the market, not a reliance on moving retail deposits from one place to another. This is the only way we will get the market moving again.
