Banks Expected to Try and Ward off Criticism

Banks warned by Osborne to lend and not pay bonuses.

Banks warned by Osborne to lend and not pay bonuses.

The British Banker’s Association (BBA) is writing to Chancellor George Osborne outlining its ideas to deflect the criticism that banks are failing to support economic recovery by building up profits and withholding much needed financing to small business.  Osborne already warned this past weekend that banks should lend more and tighten on pay and bonuses.  He told banks they have an “economic obligation” to help the sector.

This week marks the time period of bank reporting.  Analysts expect banks to be recovering nicely and reporting healthy profits.

Banks are expected to play the old bank game of bonus paying and are trying to ward off criticsim before it can begin.  Banks will probably be increasing  their compensation to income ratios and setting aside bigger sums to meet end of year performance linked bonuses.

Analysts have forecasted the big five banks should report collective profits of 8.4 billion pounds.

Angela Knight, chief executive of the BBA said: “We are looking to manage the whole business of the supply chain.  There is no magic solution to improving the wholesale market but we can take a number of small steps.  The whole chain of lending is long and complex and new rules are making it longer and complicated.”

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