Banks block £1bn small business lifeline

Investment banks irked by the Government’s attacks on City bonuses are holding up a £1bn fund for small business, according to The Times.

Gordon Brown unveiled plans at the Labour conference in September for a National Investment Corporation to prop up small businesses struggling to obtain lending from commercial banks.

It was meant to have £1bn of funds to invest in its growth fund, £200m of which was to come from eight overseas investment banks operating in the City, said to include Citigroup, Goldman Sachs and Morgan Stanley. Each was to have contributed £25m.

But after leaks of the windfall tax on City bonuses began appearing in the press before the PBR was announced, the banking giants reportedly shied away from the arrangement.