Study: Smaller banks' lending being hampered by new rules

11 February 2013

Smaller British banks' efforts to expand their lending practices are being hindered by incoming global financial regulations, a new study has found.

Research carried out by the Independent Commission on Banking (ICB) has established that new rules such as Basel III have created a "glass ceiling" that is preventing such financiers from boosting the amount of money they are able to loan, the Financial Times reports.

In the aftermath of the banking crisis, the UK government has placed much of its financial policy focus on the promotion of increased competition in the financial sector and improved growth levels through more lending to both households and small businesses.

However, many smaller banks believe they are unable to do this due to the fact they have to abide by new rules, including the fact they are affected by higher "standardized" requirements to make individual loans than their larger rivals.

James Cobb, finance director at Arbuthnot, told the news source: "In other industries, small players can cause a major distraction to bigger ones. But it doesn't happen in banking."

By Asim Shah

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