RBS CEO: Increase In Lending Not Route To Recovery

By Patricia Kowsmann Of DOW JONES NEWSWIRES LONDON -(Dow Jones)- Royal Bank of Scotland Group PLC's (RBS) chief executive said Friday that lending more isn't the solution to the economic recession, as the bank confirmed it is unlikely to meet lending targets set by the government. "I do not believe that the route to economic recovery is about borrowing more. It's about making the economy safer," Chief Executive Stephen Hester told a conference call following the bank's third-quarter results announcement. Earlier Friday, RBS, which will soon be 84%-government owned, said that although it continues willing to lend, "indications remain that it is unlikely that RBS' net business lending will increase by the GBP16 billion that we are making available, in the light of the subdued demand we currently experience." RBS and peer Lloyds Banking Group PLC (LYG) made the lending commitments after the government had to bail both banks out last year. The state's stake in RBS is about to rise to 84% from 70% as the bank enters an asset protection scheme to insure some of its assets against losses. In exchange for the insurance, RBS is giving a higher stake to the government. -By Patricia Kowsmann, Dow Jones Newswires. Tel +44(0)207-842-9295, patricia.kowsmann@dowjones.com Order free Annual Report for The Royal Bank of Scotland Grp. Visit http://djnweurope.ar.wilink.com/?ticker=GB0007547838 or call +44 (0)208 391 6028