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Nationwide unveils SME lending plan
A new player in the small business lending market is set to emerge after building society Nationwide unveiled plans to build up a range of services in the coming years.
Nationwide, which has previously only hinted at providing financial services to small and medium-sized enterprises (SMEs), said it wanted to play an increasing role in providing credit to an "important part of the UK economy".
The move comes at a time when SME lending remains under the spotlight following pressure on Britain's top five banks to provide more credit to struggling businesses.
Nationwide confirmed the plans as it revealed a 10% rise in underlying profits to £304 million on a 10% rise in underlying income to £2.1 billion.
Nationwide chief executive Graham Beale has previously said that SME lending would be a "good strategic fit" for the building society - but corporate customers should not expect loans to be available until late next year.
"We're already a lender to the commercial real estate sector, we've been asked by customers to provide them with a corporate lending facility," he said. "We just feel it's a natural extension of what we can do." He added: "We're quite confident there's sufficient demand."
The Project Merlin agreement last year was drawn up between the Government and banks in a move designed to boost lending to SMEs.
Lloyds Banking Group, Royal Bank of Scotland, Santander UK, Barclays and HSBC agreed with the Government to increase lending available to SMEs to £76 billion and boost lending available to all businesses to £190 billion.
The final figures confirmed that the five banks missed gross lending targets for small businesses last year by more than £1 billion but beat the target for all businesses by £24.9 billion.
Meanwhile, the building society said it increased gross mortgage lending by 44% to £18.4 billion in the year to April 4 in a market which grew only 5%. More than 24,000 first-time buyers took out a mortgage with Nationwide in the period, compared to 22,200 the previous year.