News from Welsh Labour

Banks urged to join Euro credit scheme to boost Welsh business and save Welsh jobs

Wrexham’s Labour Assembly Member, Lesley Griffiths, is urging UK banks to help Welsh businesses, by signing up to a European-wide scheme designed to help companies raise credit during the economic downturn.

The AM was commenting following an announcement by the European Investment Bank (EIB) that it is to increase its support for small and medium-sized enterprises(SMEs) in the European Union, by making up to €30 billion available over the next three years. The money has been made available to banks to make credit more readily available and quickly for SMEs across Europe – including companies in Wales.

It is widely regarded that SMEs are becoming the hardest hit sector in the current global economic downturn, with jobs being put in jeopardy due to the lack of credit available from banks.

As a response to lack of credit flow, the EIB have announced they would supply loans to banks, which would then enable them to pass the credit on to small businesses.

To mitigate the risks taken by UK banks in lending to SMEs businesses, the EIB has said it will take on half of the risk. This would reduce the capital requirements of lending institutions and hopefully encourage them to pass the benefits on to their customers.

The scheme is open to all autonomous firms with fewer than 250 employees.

Unfortunately, there are only three UK financial institutions – one of which is Barclays Bank plc – which have signed up to participate in the EIB’s Global Loans scheme.

This lack of enthusiasm has disappointed Lesley Griffiths and she is now calling on more UK banks to join the scheme and assist Welsh companies and, in the process, save Welsh jobs.

Commenting, she said:

“SMEs are the lifeblood of the Welsh economy and they are suffering right now as a result of nervousness in the banking sector and the resulting denial of credit. Unfortunately, UK banks are not the getting the message that businesses all over Wales are in dire need of such support.

“The news from Europe that the EIB is to make €30 billion of targeted help available to SMEs is extremely good news for Welsh businesses. However, it now needs UK banks to respond positively and in good faith to take up this offer and get credit moving again. This needs to be done quickly in order to save Welsh jobs.

“Very few financial institutions in the UK are signed-up to deliver the credit available under this excellent scheme but it’s time they did. I would encourage any Welsh businesses who have been declined credit, to lobby their bank to ensure they sign up to the EIB scheme, so they can take full advantage of what’s on offer.

“As UK taxpayers, we contribute to finance this scheme via the EIB. Welsh firms have a right to access this assistance and I believe UK banks now have a moral duty to enable to help them to do so. Welsh jobs are stake and action needs to be taken and quickly.”

Other news from Welsh Labour

• AM: Time to celebrate a People's History of Wales - 26 February 2010
• AM welcomes safer rail travel in North Wales - 23 February 2010
• Wales Boiler Scrappage Scheme announced - 11 February 2010