Financial News

  • 3 December 2013, 10:37

Cable To Name Morgan As Business Bank Chief

A former board member of Northern Rock will this week be named as the first permanent boss of the British Business Bank, one of the Government's flagship projects for stimulating lending to smaller companies.

Sky News has learnt that the appointment of Keith Morgan as the Business Bank's chief executive has been earmarked for an announcement in George Osborne's Autumn Statement on Thursday.

Mr Morgan's installation still has to be approved by the bank's board and the Treasury, but securing those is likely to be a formality, an insider said on Monday.

Confirmation of his appointment will come just days after Nick Clegg, the Deputy Prime Minister, announced that the Business Bank would receive an additional 250m for new programmes, in addition to 1bn already allocated ahead of its formal launch next year.

The new funding boost was welcomed by business groups although it still falls well short of the capital base advocated by organisations such as the Federation of Small Businesses.

The Business Bank is expected to be fully operational by the autumn of next year, subject to state aid clearance from Brussels, but has faced scepticism about whether its size will enable it to make a genuine difference in the SME finance market.

Mr Morgan, a former Abbey National executive, joined UK Financial Investments, which manages the taxpayer's stakes in the UK's bailed-out banks, in 2009.

He was appointed as the Business Bank's interim boss last December, since when the Government has run a competitive process to identify a permanent chief executive.

Last month, it named Ron Emerson, a former Standard Chartered banker, as the lender's first chairman.

The Coalition has had to contend with accusations that it has failed to do enough for small and medium-sized companies since coming to power in 2010.

A succession of initiatives, including Project Merlin and the National Loan Guarantee Scheme, have fallen by the wayside as banks have failed to bolster their lending activities.

Vince Cable, the Business Secretary, said: "The British Business Bank is ... a new long-term institution which is helping to create more competition in the banking sector and give access to finance to businesses who are currently struggling with high street banks, to get the cash they need to invest in their future growth.

"Since I announced this initiative more than 10,000 businesses have already been helped and this new money will help it do more of that.

"The British Business Bank is fixing a big long term problem in our banking system and it is set to unlock up to 10bn of finance over the next five years to help small and medium sized businesses grow."

The Labour shadow Business Secretary, Chuka Umunna, responded to Monday's news of the 250m funding boost for the Business Bank by accusing the Government of presiding over a 12bn slump in business lending during the last 12 months.

"Now into their fourth year in office, scheme after scheme trumpeted by Ministers has failed to significantly improve access to finance for our wealth creators.

"Whether moving the so-called business bank, which up until now has been little more than a re-badging of existing schemes and a renamed desk of civil servants, to Sheffield will make a difference remains to be seen," he said.

"Labour is backing plans for a proper British Investment Bank supported by a network of regional and local banks so that firms across Britain can get the finance they need to invest and grow."

A spokesman for the Department for Business, Innovation and Skills declined to comment on Mr Morgan's appointment.