More mixed signals from Lord Mandelson
Over the last few months we have seen the UK government demanding that UK banks are more risk averse with their loan approvals, we have seen regulations introduced to reduce high-risk investments but now Lord Mandelson plans to give businesses a right of appeal if their loan application is rejected. So what is going on?
The UK government is giving mixed signals to the banking industry and business sector after demanding that UK banks reduce their risk exposure but now completing a new U-turn which will give small businesses and medium-sized businesses the opportunity to appeal against any loan rejections. It is believed the appeal process will involve senior management of the banking institution in question although why a senior manager might overrule a trusted manager on the ground is debatable.
While there is no doubt that the UK business arena a struggling dramatically from a reduction in commercial lending, with the Bank of England suggesting it has fallen by £6.5 billion in January, what else can the banks do?
On one hand they have been forced to reduce their risk exposure and on the other they are being pressed into injecting more capital into the market place. Quite how the government and the banks can work together in the short to medium term to increase commercial lending is a pertinent question, but this is something which needs to be solved sooner rather than later.
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