(Adds detail from letter)
By David Milliken
LONDON, March 25 (Reuters) - British banks must keep lending
to businesses through the coronavirus crisis to ensure viable
companies do not fail, the government and Bank of England said
on Wednesday, after promising 330 billion pounds in loan
guarantees.
In a joint letter to the chief executives of major banks,
finance minister Rishi Sunak, Bank of England Governor Andrew
Bailey and the interim chief executive of the Financial Conduct
Authority, Chris Woolard, urged them to support the economy.
"This will require a willingness to maintain and extend
lending despite the uncertain economic conditions. We must
ensure that firms whose business models were viable before this
crisis remain viable once it is over," they wrote.
Last week Sunak said the government would guarantee 330
billion pounds of bank lending to business, and the BoE will buy
debt known as commercial paper from big companies that had an
investment-grade credit rating or equivalent before the crisis.
On Monday the government said businesses with sales up to 45
million pounds should be able to get 12-month interest-free
loans of up to 5 million pounds from banks.
Wednesday's letter told banks it should be a priority to
take all action necessary to enable this.
The government will guarantee 80% of the money lent.
Banks were expected to support all types of firms, not just
those covered by BoE and government schemes rolled out so far -
for example by extending overdrafts or allowing businesses to
defer loan repayments - the Treasury, BoE and FCA added.
"We also appreciate your efforts to ensure that any
flexibilities extended to customers at this unprecedented time
are recorded accurately so as to prevent an adverse impact on a
customer's credit file," they said.
(Reporting by David Milliken
Editing by William Schomberg and Alistair Smout)