Tucker: Share SME loan data to boost credit

Tim Wallace
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THE SQUEEZE on small business lending could be eased if banks could share data on credit worthiness, Bank of England official Paul Tucker suggested yesterday.

Officials have been pushing for banks to lend more to small businesses, fearing that growth is undermined if SMEs cannot get enough credit.

However large banks argue there is a lack of demand for loans from small firms, as they are cautious and unwilling to borrow in a weak environment. And smaller banks say the capital rules tilt the playing field against them, making it prohibitively expensive to lend to SMEs.

One way to lower the cost could be to give banks more detailed information on small firms’ credit histories, allowing banks to make a more informed decision on the credit risks involved.

“A mature and resilient market in asset-backed securities of loans to SMEs might well require initiatives to produce rich data sets on credit histories,” he said. “The time may have come to evaluate the utility of the central credit registers that have long existed in some continental European and Asian countries.”