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Banks face warning on small firms Banks face warning on small firms
(20 minutes later)
Bosses of some of the UK's biggest banks will be urged to improve their treatment of small firms at a meeting with the government later.Bosses of some of the UK's biggest banks will be urged to improve their treatment of small firms at a meeting with the government later.
Chancellor Alistair Darling and Business Secretary Lord Mandelson will tell bank chiefs measures are needed to soften the impact of the recession.Chancellor Alistair Darling and Business Secretary Lord Mandelson will tell bank chiefs measures are needed to soften the impact of the recession.
One condition of the £37bn government bail-out of RBS, HBOS, Lloyds TSB was that lending continued at 2007 levels. As a condition of the £37bn government bail-out, RBS, HBOS and Lloyds TSB must continue lending at 2007 levels.
But many firms have said the recent terms offered by banks have worsened.But many firms have said the recent terms offered by banks have worsened.
BBC business correspondent Nils Blythe said that there was also some confusion over what the pledge to maintain 2007 funding levels actually meant. BBC business correspondent Nils Blythe says there is also some confusion over what the pledge to maintain 2007 funding levels actually means.
Lord Mandelson has told MPs that banks will be urged to show greater "discretion and sensitivity" in their dealings with small firms.Lord Mandelson has told MPs that banks will be urged to show greater "discretion and sensitivity" in their dealings with small firms.
In a business select committee earlier this week, he said there was anecdotal evidence that smaller businesses were being hit with a "double whammy" by some banks - being asked for more security and higher interest payments on loans, while also paying extra charges. In a Business Select Committee hearing earlier this week, he said there was anecdotal evidence that smaller businesses were being hit with a "double whammy" by some banks - being asked for more security and higher interest payments on loans, while also paying extra charges.
Deal delays
The British Chamber of Commerce said that firms were finding it increasingly difficult to access funding.
"The cost of money is undoubtedly higher than it was and we see no evidence of it coming down," said the BCC's director general David Frost.
"Banks are charging for services that were previously parts of the deal.
"And the idea of relationship banking is breaking down. Everything is going through regional offices and it is taking much longer to get the okay on a loan or an overdraft."