News from Welsh Labour

Welsh First Minister commends banks to join EU credit scheme

The Welsh Assembly Government is backing an AM’s call that UK banks should sign up to a European-wide scheme, that would help small and medium sized companies in Wales raise credit during the economic downturn.

Welsh First Minister, Rhodri Morgan, was replying to a Question from Wrexham’s Assembly Member, Lesley Griffiths in the National Assembly for Wales.

The AM raised the issue of a European Investment Bank (EIB) scheme that is designed to deliver credit support for small and medium-sized enterprises (SMEs) in the European Union.

The scheme worth €30 billion will be available over the next three years.

The money has been made available to banks in order to make credit more readily available for SMEs across Europe – including companies here in Wales.

In her question to the First Minister, Lesley Griffiths AM, said:

“We are all aware of how banks are not servicing our small and medium-sized enterprises with the credit that they so desperately need. The European Investment Bank has increased its support for SMEs in Europe by making €30 billion available over the next three years, enabling banks to make credit more rapidly available to them.

“Unfortunately, only three UK financial institutions have signed up to participate in the scheme. Will you join me in encouraging businesses that have recently been declined credit to lobby their banks to sign up to the EIB scheme now, to take full advantage of what is on offer?

“Do you also agree that Welsh firms have a right to access that assistance, and that UK banks have a moral duty to enable them to do so?

In his reply, Rhodri Morgan said he wanted banks currently not involved in the scheme, to sign up. He said:

“This is the $64 trillion question in every respect. We all know that three of the big high-street lenders – the Royal Bank of Scotland, Barclays Bank and the Bank of Scotland, which is part of HBOS – have picked up on the EIB scheme, which is partly guaranteed by Government.

“On the other hand, there is evidence that the money is not yet flowing out to companies, even from those three banks. They may be engaging in negotiations, but they do not have the money yet. I agree entirely that we should be commending the scheme to the other six major lenders in this country, including Lloyds TSB, HSBC, Clydesdale and Yorkshire banks and Northern Bank. They should get in on the act.

“However, the first step is to ensure that the three banks that are already a part of the EIB-backed scheme release some of that money, as that will put huge competitive pressure on the six major lenders that are not yet participating.”

Commenting after her Question, Lesley Griffiths said:

“There is undoubtedly a reluctance by UK banks to get involved in this scheme and this is now to the detriment of Welsh businesses and Welsh jobs. The culprit banks know who they are and I hope their business customers now put pressure on them to join this EU-wide scheme.”

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