Tuesday, 20 September 2011

Bankers Not Getting Their Feet Muddy

The BBA ( British Bankers' Association) held a conference in Cardiff last week hosted by the SW Chamber of Commerce. It was a good event but I was left with a feeling of depression. Amid all the rhetoric, and the unintentionally patronising declarations of openness for business, intentions to be accommodating, and figures defending the banks' position as a key player in the economy ..... there is a fundamental lack of understanding going on which is either staggering or cynical, depending on your view point.

Bank Lending Figures 
An example is the BBA figure 85% of lending applications for SMEs are granted. Accurate I don't doubt, but far from being evidence of banks pulling their weight in this sector I think it's an appalling admission and a patronising complacent assertion.
-  It ignores those propositions that the local business manager hasn't given a nod towards.
-  It ignores the BBA's own figure earlier this month that 55% of SMEs didn't even approach their bank last year because they thought they would get turned down anyway.
-  It ignores the fact that the local business managers don't have time to spend with their sme customers who are borrowing less than £500k (say..) to knock a proposition into shape.
-  It ignores also the indifference or ignorance of the local business manager towards referring possible projects to a paid consultant who can spend the time with them to get them into shape.
-  It ignores the fact that most small business SMEs have no idea what 'shape' is in the banking sense.
To say ( as was done at the conference) that 2/3rds of SMEs did not seek finance last year as corroboration of the Banks provision of service being okay in a straightened market is paradoxical at first glance and a head in the sand concept at second glance.

Banks and Project Merlin
Banks are not in the business of not lending. A good phrase to use but not backed up by observations on the street. The Project Merlin ( banks agreed to have targets for SME lending imposed) figures are all behind. No surprise there. Then you realise that most of what has been cheerfully put forward as banks doing their bit despite the reluctance of customers to come forward with sensible propositions, is accounted for by repeated lending and renewals of facilities and not new money.
It is the reluctance of Bank seniors to get their feet muddy that bothers me.

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