By Marcus Leach

Leading UK banks have reassured businesses that they will meet their targets for lending as part of Project Merlin.

The five leading banks said they had lent UK businesses just over £100 billion in the first six months of the year, with the annual target being £190 billion.

In terms of small to medium sized enterprise (SME) lending, the banks lent £37.4 billion against the annual target of £76 billion.

Lloyds, Barclays, HSBC, Santander and Royal Bank of Scotland all agreed to lending targets with the government designed to support British economy.

"The first half-year performance demonstrates the banks' commitment to providing businesses with the financial support they need to invest and grow," said a spokesperson for the five banks.

The government reacted positively to the latest figures.

"Today's provisional results are a big improvement, with lending to small businesses up by 20% for quarter two compared to quarter one," said a Treasury spokesperson.

The British Chambers of Commerce were pleased to see banks building relations with the UK's SMEs.

"Targets only tell part of the story, what is absolutely critical is to see relationships between SME's and lending institutions rebuilt and to see trust and transparency improve," said Adam Marshall, director of policy at the British Chambers of Commerce.

However, Lloyds, Barclays, RBS and HSBC have all recently announced cost-cutting measures in their latest financial results.

"I would be concerned if cost-cutting in the banks means poorer relationship management," said Mr Marshall, adding it was too early to tell what the impact would be.

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