The UK coalition government waves its magic (Project Merlin) wand over the nations’ banks — and presto — less bonus-y, more responsible, £190bn-lendier banks.
It’s worth remembering, though, why banks have tended to veer away from lending to small- and medium-sized businesses in recent years. It’s not been very profitable.
The below charts came from Barclays’ and RBS’ submissions to the Independent Commission on Banking call for evidence and were picked up by Bond Vigilantes:
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As Bond Vigilantes notes, there’s a huge tension between (quite literally) forcing banks to lend (but prudently!) while urging them to rebuild their capital levels and simultaneously wean themselves off (cheap) central bank funding. Oh, and in a way that doesn’t damage the taxpayers’ (still sizable) banking stakes either.
Some magic will definitely be needed.
Related links:
UK banks sorcery - FT Alphaville
UK mortgages and the bank lending blame game – FT Alphaville
Fannie Mae eases credit to aid mortgage lending – New York Times, 1999