Pressure grows on Bank of England to extend assistance to car finance arms

The Bank of England is coming under increasing pressure to extend support for finance arms of carmakers, after Mini become the latest in a long-line to announce job cuts, The Times reports.Lord Davies of Abersoch, the new Trade Minister and former banker, is attempting to broker a deal to allow the finance arms to access the Bank’s £50 billion liquidity scheme.Mervyn King, the Governor of the Bank of England, has so far resisted allowing carmakers to access credit direct from the Bank. However, as the build-up of unsold cars continue to stockpile and manufacturers make drastic cuts to production, the urgency is building to extend further assistance to the car industry. Ministers have so far been sympathetic towards Mr.King’s argument that car finance companies should not be treated the same as banks.Lord Davies is now set to investigate with Bank officials the idea of a bank or banks operating like car finance companies, enabling buyers to go direct to them for loans. This plan has been widely known for some weeks but little has actually happened and Lord Davies is hoping to break this deadlock soon. He will be talking to banks in the coming week and will meet the Society of Motor Manufacturers and Traders (SMMT) as soon as possible to take the ideas further.

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