Lloyds TSB promises help for small businesses

Lloyds TSB promises help for small businesses

Lloyds TSB has responded to the government's demands to maintain lending to small businesses by pledging today to pass on any interest rate cuts and to set up surgeries to help businesses in trouble.

The move by Lloyds comes as the monetary policy committee prepares to meet today to discuss a possible one-point interest-rate cut and the government prepares to clamp down on banks in today's Queen's speech.

The government is expected to include a promise in the legislative agenda to put the voluntary code of conduct which sets out how banks treat their customers on to a statutory footing.

Lloyds is setting out a six-point charter for customers with turnover up to £1m. This includes promising to support any "viable business" it perceives to be in trouble and not to change the limit or price on overdrafts provided the risk has not changed "materially".

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The bank, which has 600,000 small business customers, is taking £4.5bn of taxpayers' money and is expected to take over HBOS next year. The government is likely to have a stake of just over 40% in the combined bank which will dominate the high street. Ministers are waiving competition rules for the deal.

John Maltby, managing director of Lloyds TSB's commercial banking operations, said the charter was mean to "inject much needed business confidence".

Lending is up 18% this year, but Maltby refused to say how much the bank would lend next year to meet government demands to maintain lending at 2007 levels. RBS, now 58% owed by the taxpayer, has already pledged not to increase overdraft rates for small companies.

The Forum of Private Business argues that the government should be putting the banking sector under more pressure. It argues that there is a near parity between the £55bn these businesses have deposited with banks and the £54bn lent out.

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