Britain’s banks have been condemned by the governor of the Bank of England for failing to lend to small businesses.
Speaking at the Treasury Select Committee yesterday, Mervyn King said it was “heartbreaking” to see so many firms being destroyed because the banks have refused them loans, despite many banks having been supported by their taxes.
King criticised the lack of face-to-face contact between banks and their customers, and he attacked the banks for their lack of loyalty and understanding over the impact of their decisions, such as refusing a loan request or increasing bank charges to businesses.
He said: “Out of the blue comes a letter churned out by a computer which says: ‘The terms of our relationship have changed.’ And they [the bosses] simply do not think that is a sensible and fair way to operate the relationship.”
King’s criticism comes after it was revealed that many small firms are using multiple banks to provide services for their business in order to spread risk.
© Crimson Business Ltd. 2010
