RBS rescue for small businesses
The UK's second-largest bank has pledged to freeze overdraft charges and guarantee overdraft availability to help small businesses survive the economic crisis.
The move, by the Royal Bank of Scotland (RBS), was praised in his pre-Budget report by chancellor Alistair Darling, who said "it should become the benchmark for all UK banks".
The British Banking Association (BBA) also announced that lending to small businesses grew by £1bn in the third quarter of 2008. It says this shows banks are continuing to make finance available, despite widespread reports to the contrary.
Earlier this month the BBA announced a new code for lending to small businesses in a recession, focusing on maintaining competitively-priced lending and improvcustomer communication.
RBS, which also owns NatWest, said that for one year from 1 December overdraft fees will be frozen, loans will not be withdrawn and repayments will not be demanded from its 1.1m small-business customers, who account for more than a quarter of UK firms with turnover of less than £1m.
RBS chairman of small businesses Peter Ibbetson said: "We believe this move will reassure our customers that the bank is committed to supporting them."
Guild of Master Victuallers spokesman Joe O'Riordan, said: "Anything that helps is a good thing. Right now most licensees are surviving on overdraft facilities.
"In practice I think this will have little effect, other than allowing licensees to accurately plan spending over the next 12 months. But it's ridiculous that Government has to urge banks to be more helpful to small businesses, given that they had a large part to play in the tax-payer bank bail-out."
