Banks block £1bn fund for small business

 Investment banks upset over the Government’s attacks on City bonuses are holding up a £1 billion fund for small business. Some high street banks are also stalling over claims that the fund is being created to boost Labour’s chances at the next election.

The tension between the banks and the Government over the Treasury’s windfall tax on bonuses came to a head in the run-up to the Pre-Budget Report last week. The Chancellor had been expected to announce a significant contribution to the fund from a number of top investment banks operating in the City.

Gordon Brown announced plans at the Labour conference in September for a National Investment Corporation (NIC) to support small businesses struggling to obtain lending from commercial banks. It was intended to have £1 billion of funds to invest in its growth fund, £200 million of which was to come from eight overseas investment banks operating in the City, said to include Citigroup, Goldman Sachs and Morgan Stanley. Each was to have contributed £25 million.

Full article: http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6961138.ece