HSBC is announcing its largest funding commitment to date for small and medium-sized enterprises (SMEs) across the UK. At £10bn (€12.52bn,$14.15bn), its commitment towards providing loans is more than the £8bn loan chest it revealed a year ago.
The move comes despite uncertainty over Brexit, the possibility that Britain will withdraw from the European Union, a referendum on which will be held on 23 June. Lloyds Banking Group warned last week that a Brexit vote would cause "economic uncertainty and potential volatility in the short term" while John Cryan, the boss at Deutsche Bank, recently said it would cost London its position as Europe's primary trading hub for sovereign debt and currencies.
Ian Stuart, head of commercial banking in the UK at HSBC, however, argued that funding would still be a requirement for small business. "Businesses will continue to operate either way, whether you're a tax operator or a corner shop, you will still be trading after June," he said, adding that HSBC had not seen any decline in demand for loans so far in 2016. While HSBC's issuance of new business loans for SMEs was up 34% in 2015, the bank claims that it approves 89% of the SME lending applications.
The bank's commitment follows many large high-street lenders getting back into the business of providing loans to SMEs following a collapse in lending during the 2008 financial crisis. A Bank of England survey indicated that the proportion of loans approved for SMEs increased for the fourth consecutive quarter in the first three months of 2016. The survey further showed that banks believe that the demand for funding from SMEs would continue to grow in the second quarter, according to the Financial Times.
As well as the £10bn commitment, HSBC is fixing its account charges at £5.50 a month for a year. The low rates are an attempt to retain older business clients and attract newer ones. The London, UK-headquartered bank has also launched an online credit decision tool for potential customers. While this is limited to loans of up to £30,000, it gives the applicant a decision within two minutes.