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UK pledges $1.6 billion for business bank

  • Britain announced on Monday it would allocate $1.6 billion towards a new state-backed business bank. to boost lending to smaller firms.

    The move comes in a bid to boost lending to smaller companies currently struggling for credit from mainstream lenders.

    It is hoped the support will be matched by a similar amount from private investment.

    The bank will operate via existing banks and other financial providers, and start within 18 months.

    "We need a new British business bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high growth companies that power our economy," said UK Business Secretary, Vince Cable.

    "Many new promising, growing companies simply can't get the loans they need to expand on reasonable terms. We are going to help fix this," he added.

    Cable has long pushed for the creation of a state-backed development bank similar to Germany's KfW or America's Exim Bank to increase commercial lending without violating European Union rules on state aid.