Banks have reduced their lending to leasing
companies by 16 percent in the last year, according to Bank of
England research collected by independent finance company

Outstanding loans from UK banks to financial
leasing companies were £23.8 billion for 31 March 2011 compared to
£28.4 billion a year previous.

The figures also reveal a 35 percent drop on
the level of bank lending to leasing companies three years ago of
£36.5 billion.

The same research from the BofE Statistical
Interactive Database shows lending to leasing companies has fallen
at a far faster rate than overall lending to private businesses
(excluding financial services companies) where outstanding loans
are down 10 percent.

Philip White, CEO of Syscap, said a trend for
banks to reduce their lending to independent leasing companies
might have a negative impact on the competitiveness of UK

“If existing leases are coming to an end far
faster than new leases are being funded then that suggests that UK
businesses are having to struggle on with old or redundant
machinery or IT and are not expanding their operations.

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“UK businesses can’t compete effectively in a
globalised market if that is happening.”

He added the leasing market is especially
important to the funding of SMEs while banks are still not meeting
targets for traditional loans to small businesses.

He said: “Unfortunately some independent
leasing companies are struggling to get the funding from banks that
they can pass on to business borrowers.”UK banks' lending to leasing companies 2008 to 2011