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By Iain Withers
LONDON, May 4 (Reuters) - Delays in offering full state
guarantees on coronavirus relief lending hampered the ability of
banks to provide fast financial aid to companies in the first
phase of the pandemic, senior British bankers told lawmakers on
Monday.
Banks have come under fire from the Bank of England and the
general public for not providing loans to companies fast enough
as a national lockdown shutters swathes of an economy heading
for deep recession.
The chief executives of commercial banking at domestic
lenders Lloyds Banking Group and Royal Bank of Scotland
said the primary reason relief lending was faster in
countries like Germany and Switzerland was due to 100% state
guarantees offered from the onset of the crisis.
"The key difference ... is that some of the other European
schemes had a 100% government guarantee from Day One," Lloyds'
David Oldfield said.
"That therefore alleviated some of this pressure on banks to
do affordability and the viability checks."
Britain's government has since launched a new 'Bounce Back'
scheme to fully guarantee loans of up to 50,000 pounds to very
small companies, but larger loans arranged under existing relief
schemes will still only be 80% guaranteed.
Eligible customers who applied for loans under the
Coronavirus Business Interruption Loan Scheme (CBILS) will be
allowed to switch to the new scheme, the bankers said.
Oldfield said that Lloyds - which has faced criticism for
lagging rivals in its provision of CBILS loans - was catching
up, but added that the bank had initially found the scheme
"painful" to implement.
Banks are expecting "extraordinary demand" for Bounce Back
loans, Barclays Bank UK CEO Matt Hammerstein told MPs.
He said Barclays had received 200 applications within the
first minute of its launch on Monday and was receiving 35 per
minute later in the morning.
Bank bosses said they were concerned about a rise in fraud
attacks since the start of the crisis, but added that the
increase so far had been small.
Anne Boden, chief executive of digital bank Starling, said
online start-ups could help deliver the neccessary relief to
struggling businesses quickly.
"We all have to pull together as an industry to make sure
British businesses survive. It's painful out there, and we've
got to get those loans out there as quickly as possible.
"Everybody's desperate to make this work. We have no option,
it must work to save our businesses."
(Reporting by Iain Withers, writing by Huw Jones, editing by
Sinead Cruise and Louise Heavens)
