Funding for Lending scheme (FLS) established by the Bank of England (BoE) aimed to compel banks to lend to small businesses has fallen, as latest figures show.
BoE data recorded that net lending to small and medium sized businesses (SMEs) fell by £800m (1.09bn) in the last quarter of 2014.
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This decrease was mainly triggered by three key lenders. BoE figures show that Royal Bank of Scotland reduced its lending to SMEs by £576, Clydesdale by £476 and Nationwide by £333m.
On the other hand Aldermore increased its net lending to the sector in the last quarter of 2014 by £129m, alongside Arbuthnot Latham (£129) and Close Brothers (£110m).
Over the same period, net lending by FLS Extension participants to all business was down by £6.9bn.
"Over 2014, net lending by FLS Extension participants to all businesses contracted by an average of £4.0bn per quarter, net lending was more negative than in 20132. This reflected developments in net lending to large companies and coincided with strong net issuance in capital markets. Net lending to SMEs contracted at a slower rate (-£0.5bn per quarter) in 2014 than it had during 2013," wrote BoE.
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By GlobalDataThe Bank and HM Treasury announced a further one-year extension to the FLS on 2 December 2014.
