Project Merlin: Banks on course to meeting lending targets

13th June 2011

The actual lending target set in the Project Merlin accord struck between banks and the government in February was only revealed last week, the FT (paywall) reported.

It said: "The secret numbers – dubbed "stretch targets" – were about 10 per cent below the official "capacity targets" published in the Merlin announcement."

"They put the banks on course to beat the overall corporate lending goal by 13 per cent and to all but hit the figure for lending to small and medium enterprises."

Only last month  banks came under attack when it was revealed they had missed lending targets to small businesses.

The Merlin agreement included a commitment to lend £76bn to small and medium businesses (SMEs) during 2011. The banks also pledged to boost overall business lending to £190bn.

However, the Bank of England's first quarterly lending report showed that the banks fell £2.2bn short of the SME target in the first three months of the year. They lent about £16.8bn to SMEs between January and March, a shortfall of about 11% on the implied £19bn target.

The FT reports that Mark Prisk, minister for business and enterprise, has also disclosed last week in a written parliamentary response that the Merlin "quarterly ‘stretch' target" for SME credit – the money that was actually lent – in the three months to March was £17.2bn, barely higher than the £16.8bn in fact achieved.

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