RBS to step up its lending to SMEs

The Royal Bank of Scotland has announced its intentions to step up its efforts to lend more money to small and medium-sized enterprises (SMEs) in order to finance expansion efforts.

Of all the UK's big banks, the beleaguered RBS has been experiencing the greatest difficulty in achieving its Merlin commitments - the government conditions the banks agreed to that must see them provide £76 billion of new loans to SMEs.

The bank's difficulty in achieving its targets has largely been due to the fact that it is already the largest provider of SME loans in the UK, with around a quarter of the market, meaning that its lending targets are particularly stretching.

It has now announced that it aims to increase lending to small businesses over the next three months by 15 per cent and waive early repayment charges as well as the upfront fees, which usually amount to around 1.5 per cent of the loans.

RBS, which is still 83 per cent owned by the government, lent a total of £44.2 billion to British businesses in the first half of 2011. That amount included £15.5 billion of loans and £4.8 billion of renewed overdrafts to SMEs.

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