Peter Ibbetson: RBS continues to "punch above our weight in terms of lending to UK businesses"
Non core includes a range of businesses and asset portfolios, primarily from Global Banking and Markets, linked to proprietary trading, and includes higher risk profile and illiquid asset portfolios and businesses that the Group has concluded do not fit its strategy for restructuring.
Paul Fisher, Executive Director for Markets at the Bank of England, acknowledged the effect of the run down in non core lending in reducing net lending figures: “The picture of flat lending growth overall is broadly as expected at this stage reflecting the reduction in some legacy portfolios being roughly offset in aggregate by expanding new lending. The plans of the FLS participants suggest that net lending volumes will pick up gradually through the remainder of 2013.”
The Bank of England said that since the start of 2012, FLS lending to individuals has typically been positive for most banks, while net lending to businesses has mostly been negative.
However RBS saw its core net lending to businesses, including asset and invoice finance, increase by £1.515bn.
Ibbetson added: “We were the first bank to introduce reduced borrowing costs for businesses through the Government’s Funding for Lending Scheme. So far we’ve allocated over £3.6bn of discounted loans to over 22,000 SME customers – saving them approximately £70m. We used the scheme to offer our best terms ever on SME loans, saving £3,000 on the average loan. Smaller businesses receive bigger discounts, with the cost of fixed rate loans falling below 3%.”
The Funding for Lending Scheme is helping to breed confidence amongst businesses, he said. According to the Business Finance Monitor, awareness of the scheme is growing and making businesses more likely to approach their bank for finance.
The Bank of England announced an extension to the FLS in April with three main objectives:
- to give banks and building societies confidence that funding for lending to the UK real economy will be available on reasonable terms until January 2015
- to increase the incentive for banks to lend to SMEs both this year and next
- and to include lending involving certain non-bank providers of credit – invoice and asset financing – which play an important role in providing finance to the real economy