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According to an article which appeared in the Daily Telegraph, Small and Medium Enterprise will benefit from a minimum of 15 percent increased lending over the coming three months. The pledge was made by CEO Stephen Hester, who admitted that the bank wasn’t yet out of trouble.

However, he did say that previous actions had placed them in a position to have a role in the recovery of the UK economy. Hester provided some details of how the bank intended to support SMEs. Initially, they would guarantee renewal of overdrafts without increasing the interest rate, with the provision that the credit file of the business is the same. He pointed out that they were the only bank to offer this reassurance.

Hester also stated that 40 percent of finance loaned to UK SMEs originated from the NatWest and RBS. The government owns 83 percent of RBS, following a bailing out of the bank in 2008 using money from UK taxpayers. Hester said:

“When businesses see uncertainty playing out on a global scale, they rightly feel nervous about their own prospects. This makes them less likely to borrow in order to expand, thus further undermining recovery.”

Interest groups and the government have placed pressure on the high street banks to increase lending to SMEs, in order to boost economic growth. A number of measures have been introduced by the government to encourage affordable lending. Project Merlin is the most recognised initiative, with the banks agreeing to targets for lending, which would have a strong focus on SMEs.

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