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Regional spread of SME borrowing revealed

The British Bankers’ Association released data on the geographical spread of SME borrowing for the first time this week.

Borrowing outstripped spending in Wales and the South-west but all other regions were net depositors, with more on deposit than they are borrowing.

More than 70 per cent of the 120 postcode areas in the study had borrowing levels of more than £500m at the end of 2012.

Banks approved £25bn of new lending to SMEs in 2012, with debt repayments outstripping new borrowing in the vast majority of areas.

Total loan and overdraft borrowing by British SMEs stood at £100.3bn at the end of last year.

Geographical_spread_of_SME_borrowing-1

The geographical study will be extended to all 10,000 individual postcodes in Britain, with the first batch of wider data released by the end of this year.

Former construction minister Michael Fallon told Construction News last year that the government would “name and shame” banks who do not “step up” and lend to construction companies.

The government announced that the British Bankers’ Association and the Council of Mortgage Lenders will publish the new data on a quarterly basis.

Each postcode area will be broken down into three categories of lending: loans and overdrafts to SMEs; unsecured personal loans (excluding credit cards); and mortgages.

BBA chief executive Anthony Browne said: “The banking industry is committed to transparency and is actively supporting the government, business and community groups in understanding the borrowing landscape for individuals and SMEs across the UK.

“The publication of thousands of postcode-level figures will help promote greater competition between finance providers and lead to better evidence-based policy making.

The government hopes the data will aid competition, allowing SMEs to identify areas where there is less lending and unmet demand, as well as highlighting more deprived areas where larger banks are often unwilling to lend.

The first dataset will include data from seven lenders:

  • Royal Bank of Scotland
  • Lloyds Banking Group
  • HSBC
  • Barclays
  • Santander UK
  • Nationwide
  • Yorkshire and Clydesdale Banks (National Australia Bank)

Chief secretary to the Treasury Danny Alexander said: “It is a major step forward in terms of transparency and should encourage competition by helping smaller lenders to identify gaps in the market and allowing businesses to hold their local bank to account where they aren’t lending.”

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