Summary
The Bank of England’s Prudential Regulation Authority (PRA) has announced a package of proposals as part of the Basel 3.1 implementation process.
Responding to the announcement, Martin McTague, National Chair of the Federation of Small Businesses (FSB), said, “Small firms will greet the PRA’s announcement with cautious optimism, and will very much hope that the PRA’s assertion that lending to SMEs will not suffer as a result of the changes turns out to be the case.
“It is clear that the PRA has listened to FSB and to others on the importance of SME lending for growth, and the risk to lending levels to small firms if the SME Supporting Factor were to be done away with.
While the factor has not been retained, the PRA says it is confident that other changes to the package will avoid an increase in capital requirements for SME lending.
“The PRA has gone to significant effort to account for the importance of small business lending – the overwhelming imperative is that the PRA will change course if, on close examination, they have got this wrong.