Page last updated at 18:17 GMT, Friday, 6 November 2009

Treasury seeks RBS lending proof

Alistair Darling: "Figures demonstrate scale of the problem RBS has got into"

The UK Treasury is demanding proof from bailed-out Royal Bank of Scotland Group that businesses do not want its loans.

RBS, which is majority-owned by taxpayers, said it would not meet its £16bn business lending target because of "subdued demand" from consumers.

The Treasury told the BBC the bank must publish a "consumer charter" to prove this in the next four weeks.

RBS will also be asked show the terms and conditions of their loans, to prove they are not too harsh.

Indications remain that it is unlikely that RBS's net business lending will increase... in the light of the subdued demand

The government this week announced that it would inject another £33.5bn into RBS, taking its stake in the troubled bank to 84%. It is already 70% owned by the taxpayer.

As part of that, RBS and fellow bailed-out bank Lloyds have also agreed to increase lending to businesses and property owners by a total of £39bn.

"We have reconfirmed the lending commitments with RBS and Lloyds this week," a Treasury spokesman said. "They will not be changing and they are binding."

Lending commitments

The spokesman added that a clause was put into contracts with RBS in February acknowledging that demand for lending might not increase as businesses sought to pay off existing debts.

"Indications remain that it is unlikely that RBS's net business lending will increase by the £16bn that we are making available, in the light of the subdued demand we currently experience," the bank said.

RBS logo
RBS has said that customers do not want its loans

It added that was "notwithstanding the group's willingness to lend to creditworthy customers and our clarity that the requisite funds are available".

RBS on Friday reported a pre-tax loss of £2.2bn for the period July to September 2009, compared with a profit of £1.9bn in the same period last year.

The bank also plans to put £282bn of its assets into the government's insurance scheme for toxic assets.

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