UK banks demand government funding for new business initiative

Earlier today we covered a breaking story regarding the UK banking community and rumours that major banks in the UK are in talks about putting together a new business initiative which would assist cash flow for small to medium-size businesses in the UK. Initially it seemed as though the banking community was coming together for the good of the UK business arena but now it seems as though the banks will use this particular initiative as a means of extracting more funding from the government and UK taxpayers.

A number of those close to the situation are comparing the proposed business fund with private equity firm 3i and the fact that banks may well take direct stakes in various businesses. This is very different from traditional lending to the small and medium-sized business arena and could see UK banks creating significant profits in the medium to longer term. In some ways you could describe the initiative as a little cheeky and ultimately looking to take advantage of the current dire situation.

It is difficult to understand why these banks in question, believed to be many of the UK's largest financial institutions, are not happy to go down the traditional lending route which has served the UK economy well for many years?