EU bank capital changes could boost small business funding
Changes to EU-wide finance rules designed to prevent bank failures could increase access to finance for small businesses.
Geert Struyven, Crowe Clark Whitehill
That’s the view of national accounting and tax advisory firm Crowe Clark Whitehill with offices in Maidstone.
The legislation known as Basel III, aimed at ensuring greater responsibility in the financial sector through tighter control of banks’ capital, was recently amended by the European Commission to ensure that loans to businesses of up to £1.5m are protected from the impending restrictions.
Under Basel III, banks must hold at least 7% of their assets as readily available cash to protect against another credit crisis, with reforms being phased in between 2014 and 2019 if the proposal is adopted by the UK Government.
It comes amid criticism that the Funding for Lending scheme is not unlocking sufficient funding to meet demand. Despite injecting £16.5 billion into the Government scheme to stimulate the economy, the Bank of England’s Trends in Lending survey showed a £4.5bn fall in net lending to businesses in the three months to May.
Geert Struyven, CCW’s Kent financial partner said: “While £1.5 million may be too small for many businesses looking to expand, the potential effect of these changes to Basel III on SMEs is positive while the banks get themselves back on track in terms of their liquidity.”
He added: “Now that banks have been reassured that lending up to £1.5 million to an individual business will not impact on their Basel responsibilities, they should be more open to supporting this important sector of the business community.”
Banks are required to have detailed action plans for Basel III in place by January 1 when the legislation is expected to become effective.
- Click here for more news from across the county
Southeastern passengers in Kent have been given a reprieve with a lower-than-expected cap on fare hikes announced in today's Autumn Statement.
Developers have promised to solve traffic problems with £6m road improvements as well as support for Park and Ride.
Read all county news