Santander frees up £2bn to extend its small business lending power

Santander UK is planning to extend its small business lending after it was able to free up over two billion pounds of funding by withdrawing from its deal to purchase the RBS branches. The major high street bank was expected to purchase 316 branches that the Royal Bank of Scotland was forced to sell in order to repay taxpayers after the bailout, but decided to pull out this week so that they could instead focus on their SME lending.

The Spanish parent of Santander moved £4.5bn to the British arm of its company a few years ago with the intent of bolstering its capital and half of this money was supposed to be used to purchase the abandoned RBS branches. However, Chief Executive of Santander UK, Ana Botin, announced that this would no longer be the case.

Botin explained that Santander is already the leader as a capitalized British bank and is now looking to become a leader in small business lending. Therefore, the bank announced a new funding programme that will allow British companies to finance their equipment purchases by using money that the bank borrows from the Funding for Lending scheme run by the government.

Botin stated that her goal is for Santander to become the top SME choice in the UK. Over the last couple of years they have managed to increase their SME lending by about 20% every year and at the moment have about £10bn lent out to small businesses. The change has come since Botin took charge after turning around lending practices at her former employer, Banesto, in Spain where she used the same tactics.