Tightening Credit Conditions Lead British to Sub-creditors

One of seven people in Britain, the most active consumers in Europe, will not benefit anymore from loans by the biggest banks in the country until the end of next year, growing a legion of sub-creditors.

British number that were rejected by traditional lenders will climb to 9 million next year or 15% more than at the end of last year, said Jonathan MacDonald, an analyst in Datamonitor.

Sub-lending market will grow by 11%, to 10.1 billion pounds (16.4 billion dollars), up to the end of this year, he said.

“Sub” Interest of 350% per year

Banks including Lloyds Banking Group and Royal Bank of Scotland owned by the government which deal with losses, decline a growing number of consumers after tightening lending criteria. Instead, sub – customers are accepted by the lenders that charge interest of up to 350% per year.

“We are worried because people are forced to resort to more dangerous types of lending where interest rates are very high,” said Frances Walker, spokesperson of Consumer Credit Counseling Service.

HSBC, the biggest European bank, closed it British Beneficial Finance sub-division and announced its intention to close 100 of the 125 branches. In this way HSBC follows example of Deutsche Bank and Barclays, who have withdrawn from the sub market in 2007 and 2008 in the slowing condition of economic growth and increasing volume of bad loans.

“If we don’t exist, all clients should receive money from somewhere, may be appealing to illegal lenders, “said CEO Provident Peter Crook.