The UK's major banks are gearing up for a significant expansion in regional lending, with NatWest and Lloyds taking the lead. In a move driven by Labour leader Andy Burnham's devolution agenda, these institutions are positioning themselves to tap into expected government-backed infrastructure projects and business growth in areas currently underserved by major capital investment.
According to data from both banks, their regional presence will increase by 15% over the next two years, with a corresponding rise in lending of £5 billion. This expansion is not only driven by Burnham's vision for devolution but also reflects a broader recognition that traditional South East-focused lending avenues are becoming saturated.
Devolution, under Mr. Burnham's guidance, will grant greater autonomy and decision-making powers to regional and local governments, including control over budgets for transport, housing, skills training, and economic development. Banks anticipate tapping into this new pipeline of projects, from SME expansion to large-scale urban regeneration and green energy initiatives, which will directly impact local communities.
The increased competition among banks could lead to more favourable terms for businesses and local councils seeking finance, potentially reducing borrowing costs by up to 20% in some cases. Analysts suggest this is a strategic play to align with political priorities while tapping into new growth markets.
While Labour's specific policy details are still emerging, the 'levelling up' or regional rebalancing agenda has been consistent across the political spectrum for several years. The banks' proactive engagement marks a significant development, potentially ushering in a new era of investment and economic dynamism for regions across the UK.
A study by Deloitte estimates that £10 billion in annual investment is required to meet regional growth targets, with devolution expected to unlock at least 50% of this amount. Major banks are now poised to play a pivotal role in mobilising these funds and driving economic transformation outside of London and the South East.