S are being urged to publish mortgage lending and consumer credit decisions by region, according to a letter from business minister Michael Fallon, made public yesterday.
He is following the lead from business secretary Vince Cable who last week called on banks to publish small business lending levels by constituency on a weekly basis.
The hope is the extra transparency will either embarrass banks into lending more or to allow politicians to apply more leverage in negotiations.
“We are sure that as part of your results you will be eager to show not just the return your institution offers its shareholders and employees but also the utility the banking sector can provide to society and the economy more broadly,” Fallon wrote.
“A commitment to publish your institution’s lending by local area will no doubt support this case.”
The major banks are thought to be considering their response to the request.
“The banking industry is committed to transparency and is actively working on the publication of data on business borrowing for 120 postcode areas,” said the British Bankers’ Association.
“The industry is constructively discussing with government what further information would assist policy formation.”
Banks have come under fire from politicians for reducing lending since the financial crisis.
They are in a tough position as they try to cut down on the type of risky lending which led to the credit crunch, at the same time as new regulations force them to set aside more resources instead of lending.
Political schemes including Project Merlin tried to push banks to lend more, but missed industry targets.
The latest is the Funding for Lending Scheme which gives cheap funds to banks to lend on, thought so far business lending is still on the decline.