Credit Flow

LONDON, August 1, 2010 (AFP) – British banks must use first-half profits to boost lending to businesses, Chancellor of the Exchequer George Osborne said in an interview on Sunday, ahead of key results for the nation’s top lenders. “But the industry’s ability to support the economy needs to be considered as the increased capital and cash we are required to hold cannot both be set aside and used to finance lending.”

Lloyds and RBS are now 41-percent and 83-percent state-owned, after both groups received substantial government bailouts at the height of the global financial crisis. As major banks prepare to reveal that they bounced back in the black during the first six months of 2010, they must get credit flowing, Osborne told The Sunday Telegraph newspaper.

“We have got to be pretty clear with the banks … that we will not tolerate banks piling the pressure on small and medium-sized businesses,” the finance minister said.

“They have an economic obligation to assist that sector and give it all the assistance that they got.”

HSBC begins the half-year banking results season on Monday, followed by Lloyds Banking Group and Standard Chartered on Wednesday, Barclays on Thursday and Royal Bank of Scotland (RBS) on