UK Banks Fund Venture Capital
Top British Banks Inject £1 billion to Venture Capital Fund
The UK’s 6 largest banks have decided to inject £1 billion ($1.59 billion) to a venture capital fund as a way of kick starting the SME sector. The banks–Lloyds, Royal Bank of Scotland, HSBC, Barclays, Santander UK and Standard Chartered–announced they will collectively invest the £1 billion into the new venture capital fund over the near future.
The move represents a move by the banks, many of which were bailed out with taxpayer funds during the financial crisis, to address criticism from the government and the public that they have not been lending enough to small businesses.
The fund is to provide equity funding to businesses, leaving them in a better position to seek a bank loan. Lack of liquidity has been a key factor in the reluctance on the part of many banks to loan to smaller companies.
The fund is to be run on a commercial basis, and has been compared to the original remit of FTSE-listed UK private equity firm 3i, which was formed after the Second World War to provide investment funding for SMEs as the Industrial and Commercial Finance Corporation (ICFC).
The measures are part of a larger project being coordinated by the British Bankers’ Association, in conjunction with the UK Treasury and the Department of Business. Barclays head John Varley is currently heading the taskforce. Source
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