HSBC has announced that they will be raising the amount of money they set aside for mortgages in 2009, up by 20 per cent to a generous £15 billion.  The news comes after great efforts by the Government to see to it that banks in the Britain continue lending to customers despite the current economic crisis.

HSBC’s managing director, Paul Thurston, stated that, “HSBC has no intention of closing its doors to customers.  By some estimates, net mortgage lending in the U.K. will fall next year.”

This important move for the bank follows closely an announcement by HSBC to make £1 billion of extra funding available to small business customers, a move that the Government has been calling for from large banks in the UK for some time now.

Michael Geoghegan, chief executive of HSBC, claims that the bank understands the current economic downturn and is taking steps to make sure HSBCs customers’ worries are eased.  He said, “This is a difficult time for business in many economies. Customers are rightly looking to see how banks can help.”

However, the major banks in Britain are being criticised by the Federation of Small Businesses for doing too little, too late, and the FSB are claiming that small businesses across the country are in a position where they are faced with precious little choices other than to “throw in the towel”.

The Federation are preparing to speak out at a Small Business Finance Forum by presenting staggering results that indicate a huge number of small businesses in the country are thinking about shutting their doors, 40 per cent in fact.

The Federation’s chairman, John Wright, sees that there are too many young firms that are unable to cope with the pressures of a recession and will be left with no choice other than closing down their businesses.

A spokesman for the Federation said, “A quarter of small businesses are now using credit cards to run their companies and paying rates of 12pc-15pc or more is crippling.  There are too many teenage branch managers who haven’t experienced a recession and don’t understand the problems facing our members,”

The Federation claims that banks are acting in a “scrooge-like” manner as poll results indicate that 30 per cent of SMEs had been subjects to banking cost increases in the last two months alone even though interest rates are the lowest they have been since 1951.

John Wright is demanding that more is done as the closure of these small businesses would prove to be a “disaster for millions of employees as well as the economy as a whole.”

The Federation of Small Businesses chairman added, “The onus will now be on the banks and their branch managers to stop their Scrooge like tactics and open their pockets to small businesses.”

However, the banks are claiming that they are doing what they feel is necessary in such a difficult economic time, and the news of HSBCs new £1 billion funding for small businesses will go a long way to justify such a claim.

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