Banks are on track to miss Merlin target

 
Marion Dakers
THE TREASURY yesterday gave its support to the UK banks involved in the Merlin agreement, despite preliminary figures showing that the banks are on course to miss targets for lending to businesses.

Figures collated for the Bank of England by accountants at PricewaterhouseCoopers suggest that since the Project Merlin deal was made between the government and the banks in February, lending to small businesses has fallen short of a £19bn quarterly target.

HSBC, Barclays, Lloyds Banking Group, Santander and Royal Bank of Scotland have lent out around £16.8bn between January and the end of March, according to the Bank’s statistics.

Overall business lending has come closer to the Merlin benchmark during the last three months, with the five institutions doling out around £47.2bn compared with an expected quarterly rate of £47.5bn.

The Merlin deal set out annual lending targets in a bid to improve transparency in the banking sector, though the tallies from the latest quarter are the first indication of how the banks are living up to this element of the Project Merlin commitments.

A Treasury source said yesterday that while the figures had not yet been finalised, “it is encouraging that the banks are broadly on track to meet the stretching £190bn target that was only agreed half way through the quarter”.

The firms said in February they were able to lend £190bn during the year, £76bn of which was to go to smaller businesses.

“It will be disappointing if the numbers show that, within the overall total, lending to SMEs is behind schedule, but it is still early days.”

The final figures are due to be released by the Bank next week, as part of the banks’ commitment to hand over quarterly lending statistics under the Merlin agreement.

The figures will form part of the performance targets used for top executives at the UK’s biggest banks.

Industry group the British Bankers’ Association was unavailable for comment last night.