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State-controlled banks to miss lending targets

In another bitter blow for the UK government it has been revealed that both Royal Bank of Scotland and Lloyds bank will miss their lending targets which were enshrined as part of the conditions for obtaining substantial state aid just a few months ago. Royal Bank of Scotland, 70% owned by the taxpayer, was instructed to lend an extra £25 billion this year with Lloyds bank, 43% owned by the taxpayer, set a target of £14 billion.



Unfortunately, both companies have confirmed they are likely to miss their targets for the full year although both have blamed the corporate lending market and the fact that there has been little demand from large companies so far. Interestingly, both companies are set to hit their targets for mortgages and small-business lending but the large corporate lending portion of the figure is proving more difficult to capture. Whether it is a case of conditions which are too stringent or simply a lack of demand at this moment in time remains to be seen.



Many analysts and observers had banked on the likes of Royal Bank of Scotland and Lloyds bank increasing liquidity to the marketplace as a means of pulling the UK out of recession. If this is not the case, will we see more UK companies go under and will the UK economy as a whole fall back?

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