Steve Dinneen
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BANKS are clubbing together in a bid to end claims they are starving small businesses of credit.

The banking taskforce comprises chief executives from the major UK financial institutions and the British Bankers’ Association (BBA). The BBA has drafted a letter to chancellor George Osborne setting out a raft of proposals it says will ensure the industry plays its part in the economic recovery.

The letter, signed by the BBA and HSBC chairman Stephen Green, says the banking industry is committed to fuelling the economic recovery by extending credit to “viable businesses”.

Banks have maintained that net lending has fallen or remained flat because SMEs are choosing to repay loans, not because institutions are unwilling to supply them with credit.

The taskforce says it will carry out research in several key areas including:

• A detailed analysis into demand for funding by small and medium-sized enterprises (SMEs).

• Suggestions to improve the wholesale banking sector.

• An investigation into ways to work more closely with SMEs.

The taskforce claims it will “operate to a short timetable and be comprehensive in its coverage”. It expects to publish initial findings as early as October and is seeking a meeting with the chancellor to coincide with this.

The launch of the study comes after a wave of criticism over bank lending practices, including from Bank of England governor Mervyn King.

Angela Knight, chief executive of the BBA, told City A.M.: “There is a lot of information about supply of finance but almost nothing about demand. The taskforce can help clear up the allegation culture by providing hard data. It is vital we have actual numbers rather than hearsay.

“We can’t have banks lending to people who aren’t credit-worthy. However, as the recovery takes hold there will be a grey area around who is worthy of credit and who is not. The taskforce should help to shine a light on this.”

One senior adviser to several top banks said the move is unusual, with banks normally content to take swipes at one another.

He said: “Unlike the private equity industry, which quickly formed an alliance to fend off criticism after the financial collapse, the banks have been happy to sit back.

“This move may be late but it is a significant step in their fight back.”