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July 26, 2013

Local banking data to shed new light on lending

From 2014, the UK's biggest lenders are to reveal how much they lend at a local level, publishing statistics across 10,000 individual postcodes. Danny Alexander, chief secretary to the Treasury, described the initiative as "a major step forward for transparency on bank lending".

Seven of the UK's major lenders, which make up around 80% of the current stock of lending, have agreed to reveal their lending data. The Government says this will boost competition and make it easier for small and medium-sized businesses to access finance.

Danny Alexander said: "From next year, businesses will be able to see exactly where the major banks are lending – up to within a few streets of their premises. It is a major step forward in terms of transparency and should encourage competition by helping smaller lenders to identify gaps in the market and allowing businesses to hold their local bank to account where they aren't lending."

The data will be published by the British Bankers' Association (BBA) and the Council of Mortgage Lenders on a quarterly basis and it will show the outstanding stock of lending that has been committed to customers across three categories: loans and overdrafts to SMEs, mortgages, and unsecured personal loans (excluding credit cards).

The first dataset will include data from seven major lenders: Royal Bank of Scotland, Lloyds Banking Group, HSBC, Barclays, Santander UK, Nationwide, and Yorkshire and Clydesdale Banks (National Australia Bank).

This week, the BBA published regional data showing SME borrowing and saving in the 120 British postcode areas. It shows that most regions are net depositors, with SMEs in London, the South East, East Midlands, the East of England, Yorkshire & Humberside, the North East, the North West and Scotland having more on deposit than they are borrowing.

John Allan, national chairman of the Federation of Small Businesses (FSB), said: "The FSB has called for lending data to be broken down by postcodes to give a clear view of the regions that aren't getting finance. This type of information has helped non-bank lenders grow in America through its Community Reinvestment Act. This data must be used to look where firms are being refused and feed into the work of the business bank and regulators to increase competition in the sector."

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