Sunny

Sunny

max temp: 23°C

min temp: 17°C

ESTD 1874 Search

The pigs have arrived. See the latest

Pigs Gone Wild

news here.

UK: Nationwide Building Society delays its launch into SME lending

09:54 27 August 2013

The Nationwide Building Society has delayed its launch into the SME lending market.

The Nationwide Building Society has delayed its launch into the SME lending market.

Plans to boost credit to small businesses have been dealt a blow after a major lender delayed its launch into the sector until 2016.

Nationwide, the UK’s biggest building society, is reported to have put on hold plans to lend to small and medium-sized enterprises (SMEs) as regulators force it to hold more capital as a buffer against financial crises.

The mutual, which had planned to begin lending to small businesses this year, faces demands to bolster its leverage ratio, which measures its capital as a percentage of its assets, to 3% by the end of 2015.

Nationwide’s delay will be a blow to Government plans to unblock the credit logjam to small firms, seen as vital to speeding up economic recovery.

Nationwide revealed plans to enter the SME loans market last year, where lending has shrunk as banks retreat and demand wanes. At the time boss Graham Beale described it as a “natural extension of what we can do”.

But the Prudential Regulation Authority (PRA) recently demanded Nationwide draw up plans to plug a hole in its balance sheet by bolstering its leverage ratio.

Mr Beale criticised the measure as a “crude instrument which will be a constraint for low-risk lenders (and) too lenient for high-risk lenders”.

Weeks later the building society was given vital breathing space by the regulator on meeting the tougher standard, when the PRA approved its capital-raising plans and gave it until the end of 2015 to increase its leverage ratio from 2%.

At the time Nationwide did not say how it will bolster its capital levels, but its plans do not involve raising extra funds from investors.

According to the Financial Times, Nationwide aims to focus increasingly on its market share of current accounts instead.

The FT said the building society is now unlikely to launch a full SME service before 2016.

A spokesman said: “We have previously said that it is our strategic intention to enter the SME banking market and that we will do this at the right time for the society and our members. That remains our intention.”

Business Secretary Vince Cable last month stoked tension with the Bank of England by comparing policymakers to the Taliban over the tougher capital rules.

He said its demands that banks must boost the levels of capital they hold to protect against future financial shocks is deterring small business lending and holding back recovery.

Mr Cable said: “One of the anxieties in the business community is that the so-called ‘capital Taliban’ in the Bank of England are imposing restrictions which at this delicate stage of recovery actually make it more difficult for companies to operate and expand.”

However, the Bank of England denied any suggestion that it was to blame for the Nationwide’s decision.

A spokesperson for the bank said: “The plan agreed with Nationwide to meet the 3% leverage ratio in 2015 will not result in them restricting lending to the real economy. Therefore it is wrong to blame their SME decision on the regulator.”

0 comments

An artist's impression of the new look planned for the former BBC Television Centre bulding in the White City area of west London.

Mildenhall-based English Architectural Glazing (EAG) has won a major contract to carry out work as part of the multi-million-pound regeneration of the former BBC Television Centre in London.

Laurence Johnson and Daniel Le Sauvage of Urban Vintage in Framlingham.

An award-winning independent men’s fashion retailer from Suffolk is celebrating its new store opening today with special offers and free drinks.

Sizewell C

Proposals to build a new £16billion nuclear power station on the Suffolk coast will move a step closer next week.

Alex Till, chief executive of Menta, left, with John Baxter, managing director of eAlliance Learning Technology which has formed an online learning partinership with the enterprise agency.

Suffolk-based business support organisation Menta has launched a new online learning partnership to help busy entrepreneurs develop their skills.

Tristel's headquarters at Snailwell, near Newmarket.

Infection prevention and contamination control products company Tristel said yesterday that profits for the 12 months to June 30 will come in ahead of market expectations.

HOT JOBS

Show Job Lists

Most read

Most commented

Topic pages

Streetlife

Newsletter Sign Up

Sign up to the following newsletters:

Great British Life

Great British Life
MyDate24 MyPhotos24