UK banks confirm plans for £1.5 billion rescue fund

A consortium of six major British banks has today confirmed plans for a £1.5 billion business growth fund which will be targeted at small businesses. Companies with turnover between £10 million and £100 million have been neglected over the last few months with regards to cash flow and funding issues. As a consequence Barclays, HSBC, Lloyds, Royal Bank of Scotland, Santander and Standard Chartered are now placing pressure upon the government to become involved in the scheme.

There is no doubt that risk averse banks in the UK have effectively neglected the small to medium business arena over the last 12 months. These are businesses which need short-term funding and which have potentially lucrative long-term futures. However, a mixture of reduced funding in the money markets together with a very difficult economic environment have come together to leave these companies high and dry. The fund in question will be managed by a totally independent committee which will operate at an arms length distance from the banks in question.

It will be interesting to see how the UK government responds to this request for additional finance for the £1.5 billion scheme because there is no doubt that a plan of this nature is vital.