The Governor of the Bank of England and the Chancellor of the Exchequer have sought to allay fears that banks may not fulfil their obligations to ensure businesses and consumers benefit from emergency credit facilities launched following the coronavirus outbreak.
The UK has announced a number of “unprecedented measures” to support businesses and protect jobs – they include the COVID Corporate Financing Facility (CCFF) for large firms of investment grade or equivalent and the Coronavirus Business Interruption Loan Scheme (CBILS) for small and medium-sized enterprises.
However, despite the measures having been introduced, there are concerns about how willing banks will be to fulfill their new obligations to support the economy by extending lending.
In an effort to reinforce the message regarding banks' new responsibilities, the Chancellor of the Exchequer Rishi Sunak, the Governor of the Bank of England Andrew Bailey, and the CEO of the Financial Conduct Authority Christopher Woolard have written a joint letter to UK banks telling them to do everything possible to ensure businesses and consumers benefit from the new measures.
“The priority for all of us – banks, building societies, government and the financial authorities – should now be to take all action necessary to ensure that the benefits of the measures are passed through to businesses and consumers,” the letter says.
“This will require a willingness to maintain and extend lending despite the uncertain economic conditions. We must ensure that firms whose business models were viable before this crisis remain viable once it is over. This includes those firms not covered by CBILS or CCFF.”