Ulster banks sign up to funds scheme
MOST banks in Northern Ireland have signed up, or are signing up to, the Bank of England's Funding For Lending Scheme.
Last week it was announced that the bank will expand the initiative, which was due to end in January 2014, for another year to 2015.
Banks will be given greater incentives to lend to small and medium-sized businesses, and creditors other than banks will be able to participate.
The scheme is aimed at encouraging banks to lend by offering them cheap loans on the condition they pass them on to customers.
Since its launch in August 2012, it has been criticised for failing to boost lending, but Bank of England figures suggest banks took nearly £14bn from the scheme between August and December last year.
This week Ulster Bank said that it has has agreed more than £70m in new lending to Northern Ireland businesses under Funding For Lending Scheme since September 2012 as more local banks seek to sign up to the initiative.
More than 400 local SMEs have already applied to Ulster Bank for funding under the scheme.
Based on an average small business loan of £100,000, this could result in savings of £4,000 over the term of the loan – made up of a £1,500 arrangement fee and £2,500 interest.
Ulster Bank says it is committed to building on its lending under FLS in 2013 and that many more Northern Ireland businesses and entrepreneurs could benefit from funding at reduced rates as a result. Ian Jordan, director of the corporate banking division at Ulster Bank said that affordable finance helps support business development and job creation.
"The lending that we have agreed to date under the Funding For Lending Scheme is facilitating a variety of projects across a range of important business sectors, including tourism infrastructure, manufacturing plants and the expansion of exporting companies," he said.
"Ulster Bank recognises the important role it plays in supporting Northern Ireland businesses and we look forward to using the Funding for Lending Scheme to benefit many more enterprising SMEs and entrepreneurs."
Other lenders are also coming on stream.
Danke Bank said it is on the road to offering the scheme.
"We are in the process of opening a Discount Window Facility (DWF) with the Bank of England which is a prerequisite to Funding for Lending Scheme participation," said a spokesman.
"Once the Bank of England has completed this process, we will consider Funding For Lending Scheme participation; however we currently have a very strong liquidity position, with no immediate need for funding."
A spokesman from First Trust Bank added: "We have applied to join the Funding For Lending Scheme and our application is progressing.
"We continue to make finance available to SMEs through our Business Support Fund launched last May, and we also recently announced a Mortgage Fund to help homeowners and aspiring homeowners."
Spanish-based Santander said that it could not break down regional figures for the Funding For Lending Scheme but added that it increased lending to SMEs in Northern Ireland by 24% in the year up to end of March 2013.
Barclays said that while it actively participates in Funding For Lending in Northern Ireland and offers 2% cashback on facilities, capped at £200,000, it could not release specific Northern Ireland statistics.
A spokeswoman said that in November 2012, Barclays and Bank of Ireland announced the completion of a £50m financing arrangement aimed at supporting the delivery of at least 2,500 affordable homes in the next four years through the Co-Ownership Housing scheme.
Bank of Ireland itself said it is also intending to come on board the scheme.
"Bank of Ireland UK is planning to participate in the Funding For Lending Scheme and expects to be able to do so in the near future," said a spokesman. "In terms of our ability to lend in Northern Ireland, we are not constrained by funding issues and continue to support business growth despite the demand for finance remaining subdued."
HSBC does not currently partake in the scheme.
The amount that Ulster Bank will lend to local firms under the scheme £14bn
Amount given to banks in the last six months
Amount lending shrank by in 2012
Amount lending is expected to grow