For Argyll

Lloyds TSB and HBOS have both today (3rd December 2008) announced packages to help small businesses. Issued in advance of the Queen’s Speech, this comes on top of last week’s announcement by Royal Bank of Scotland (RBS) that it will guarantee overdraft rates and contracts for its business customers for at least a year.

Lloyds is introducing a six point charter that includes promising:

• to pass on future interest rate cuts to its customers with turnover below £1m a year
• not to change overdraft terms for the duration of a company’s agreement - normally 12 months
• to keep business borrowing rates linked to the Bank of England base rate and not to the London Inter-Bank Offered Rate (Libor).
• not to change the terms on renewal unless the company’s risk profile has changed
• to agree to any reasonable request for short term financing
• to host business advice seminars around the country

The Bank of Scotland, part of HBOS, wants £250m of funding from the European Investment Bank so that it can lend to small businesses at discounted rates. It says it will not make overdrafts repayable on demand.

As with Lloyds TSB, the Bank of Scotland has committed itself to keeping business borrowing rates linked to the Bank of England base rate and not to the London Inter-Bank Offered Rate (Libor).This is the rate at which banks lend to each other.

The Government has also announced details of how its 100% guarantee of deposits held with the failed London Scottish Bank will work.

The guarantee will cover all 10,000 depositors, even those above the statutory £50,000 guarantee by the Financial Services Compensation Scheme (FSCS). The combined deposits in question amount to £250 million.

Depositors will have to apply to the FSCS for their money at the point when the terms of their deposits mature.