Bank lending fell throughout 2011 (From Asian Image)

Bank lending fell throughout 2011

10:22am Monday 13th February 2012 in National News © Press Association 2011

Lending by Britain's top five banks shrank every quarter last year, official figures have revealed, in an embarrassing blow to the Chancellor's Project Merlin agreement.

After taking loan repayments into account, the five - Lloyds Banking Group, Royal Bank of Scotland, Santander, Barclays and HSBC - saw combined net lending slide in 2011, the Bank of England said, including a 3% drop in the final quarter.

The figures also confirmed that the five banks missed gross lending targets for small businesses in 2011 by more than £1 billion but beat the target for all businesses by £24.9 billion.

Royal Bank of Scotland, which is 83% owned by the taxpayer, is the culprit for the shortfall in small business lending after the other four lenders came forward and confirmed they had beaten their targets.

Under the Project Merlin agreement, Britain's top five banks said they would increase lending available to small and medium enterprises (SMEs) to £76 billion this year and boost lending available to all businesses to £190 billion.