02/08/2010

Osborne Demands Banks 'Up Lending'

The Chancellor George Osborne has added to calls for banks to lend more to businesses in order to sustain the economic recovery.

The weekend move by the senior Cabinet member came just hours before a leading bank, HSBC reported pre-tax profits of $11.1bn (£7bn) for the first six months of 2010 - more than double its profits for the same time last year.

The bank said it was profitable in every region, except for North America where it saw losses of $80m.

In the UK, profits totalled $2.1bn - a rise of 26%.

The UK's other major banks Lloyds, Barclays and RBS are due to report their results later this week.

HSBC shareholders will receive a second dividend this year, totalling $1.4bn, in addition to the one announced earlier this year.

In a sign of the improving conditions in the banking sector, it said the amount of money set aside to cover bad loans had fallen to $7.5bn - the lowest level since the financial crisis began in 2008.

The Chancellor said the banks had an 'economic obligation' to lend to cash-strapped businesses and warned them that the Government 'will not tolerate banks piling the pressure' on small firms.

He hinted that they could be hit with legally binding lending targets if they decided to pour cash into obscene bonuses for bankers rather than injecting money into struggling firms.

(BMcC/GK)

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