The U.K. is still facing a possible exit from the European Union, but the so-called Brexit isn’t stopping major bank HSBC from banking on U.K. SMEs.
Reports by Financial Times on Monday (April 18) said HSBC has allocated £10 billion (about $14 billion) for small business loans. The initiative marks the FI’s largest funding package for SMEs in the U.K. in its history, according to reports, surpassing even the $11.4 billion effort launched last year.
Amid criticism towards the banking industry over what some claim is a lack of transparency for small business customers, HSBC also announced that it will be fixing the monthly fees for businesses to use their bank accounts at £5.50 ($7.85) per month, though only for one year.
While small business lending is picking back up among traditional banks — recent figures from the Bank of England found that SME lending for banks saw an increase for the fourth quarter in a row this year — reports pointed to the possibility of the Brexit and its potential to impact the small business world.
Lloyds Banking Group, for instance, highlighted the possibility of “economic uncertainty and potential volatility in the short term” for the U.K. if it is to leave the European Union, reports said.
But HSBC Head of Commercial Banking in the U.K. Ian Stuart told the publication that SMEs will still demand financing from banks, Brexit or no Brexit.
“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. The referendum that could decide whether the U.K. will leave the EU is slated for June.
Stuart added that, so far, financial institutions have not seen a decreased demand for SME lending.
According to HSBC, it approves 89 percent of SME loan applications and boosted its gross new SME lending by 34 percent last year.
HSBC’s plans also coincided with the release of research from Visa Europe, which found that SMEs trust traditional banks more than they do alternative payment service providers. The analysis found that 59 percent of U.K. SMEs favor traditional FIs over alternatives.