Banks 'must lend to small firms'

[Scottish Business Owner]

This whole thing is a sorry mess. The rule book has been ripped off and banks have got away with being highly irresponsible. This isn't the end though, banks will continue to get bailed out because any other outcome is just unthinkable.

I just hope the steps being mooted about trying to stimulate credit in both the mortgage marage and for small businesses comes to fruition or I really fear a very prolonged period of misery for many people

 

[Power Lunch Club]

Am I missing something here.....

The goverment is "mulling over" £20bn loans to guarentee to banks against businesses defaulting on their loans.

BBC NEWS | Politics | Ministers mull £20bn loan scheme

The issue is still banks not lending to business and have they already not been given guarentee's? What the £20bn for?

 

[jimbairn]

For those not on my Monday Cartoon list:

 

[Scottish Business Owner]

You're right Gordon and there's a massive contradiction in this as well. I think I read today that taxpayers will own 43% of the combines HBOS/Lloyds business. They also own in excess of 50% of RBS. OK you can skate around the fact that I think they are preference shares but to some degree isn't the government guaranteeing something that they've already guaranteed?????

How do banks make money if they dont lend to other people etc? It seems as ifwhat they've decided is that they'll just hike the interest rates to people who already have borrowings knowing fine well they cant go elsewhere. The banks have got the proverbial get of out jail free card to be used at any time they feel fit

 

[davidc]

Best one yet with the government hearings into the banking crisis on SKY 503 Government news channel. They have just had a guy (Ronnie Fox)on giving testimony on why the financial services companies must still pay bonuses this year in order to keep their best people. One guy received £7m on top of his astronomical basic of £750,000.
Blind leading the blind.:001_rolleyes::001_rolleyes:

 

[Scottish Business Owner]

Not sure how many of you have noticed a recent announcement from Lloyds TSB and their charter for small businesses. Not really sure how much of this is for pr purposes but it seems that many of the other banks will also announce similar charters which on the surface seems a step in the right direction.

I've posted a link to the charter below and at the very bottom of it you will find some really good articles and tools for managing your finances

Lloyds TSB Commercial launches charter for small businesses

 

[Power Lunch Club]

Not sure how many of you have noticed a recent announcement from Lloyds TSB and their charter for small businesses. Not really sure how much of this is for pr purposes but it seems that many of the other banks will also announce similar charters which on the surface seems a step in the right direction.

I've posted a link to the charter below and at the very bottom of it you will find some really good articles and tools for managing your finances

Lloyds TSB Commercial launches charter for small businesses

This is wall paper , nothing more nothing less....if you want something on a blank wall to look at then print it off.

If banks were actually any good or even had at their heart a true desire to help business, they would live it...but to make themselves look all touchy feelly they put out this crap.

Clearly I am not a fan of banks (all of them)...but I do feel sorry for many of the relationship managers who work for them...many of them want to make a difference to a business, but time and time again they are restricted by internal bank policies designed to make the banks money at all cost.

I have said it before and I'll say it again, we in the UK are ready for a new bank, with new thinking, one with a desire to put their customers first and not themselves. Once they take that route we will see both succesful businesses making money and able to create morally built strong banks.

 

[AVS Agencies]

But Gordon surely you are forgetting one thing here? Banks are a business! If they work for the total good of their customers they are then failing their shareholders and of course not forgetting that for SOME banks, we are shareholders! So they just can't win can they?

Now I do not wish to sound as if I am teaching people to suck eggs here but how many realise that banks lend to consumers at x + base rate and if thats too high we whinge, and yet they lend to each other at LIBOR rate, which at present is still higher than base rate and likely to remain so. In fact as one point recently LIBOR was some 2.5% above base rate so if they are lending to you at this how the hell are they supposed to make money to pay staff etc??

Oh I aint saying that various shouldn't be taken to task for the mess they have made of it all recently just it aint completely black and white ... in this instance there are various shades of it that need considering!

 

[ShaaWasmund]

It is disappointing that no action was taken on this in the Budget.

51% of respondents in a recent Smarta.com survey wanted to see the Chancellor commit to implementing measures to encourage banks to lend.

This shows how important it is that there must be significant and immediate support for SMEs - they are the life blood of the UK economy. Measures to ensure banks are lending, tax relief and credit insurance guarantees should have been part of the budget

Shaa Wasmund

 

[Lois]

Not only are banks being slow to lend but are hiking their rates!

We use a number of our bank's services and I am frankly appalled at the increase we've just been landed with for our overdraft facilities (which are quite modest) but a jump from 3% to 5.5% above base rate? Was breathtaking.

Also we factor - operating 2 ledgers - one for domestic clients and one for overseas clients. We have (not surprisingly) been concentrating on increasing our export portfolio and what does the bank do? You've guessed it they've hiked the factoring service charge and wait - reduced the service!

Before we had credit protection included in the service charge whereby we were only liable for the first £500.00 - now we are liability for the first £2,500.00 and the bank will only cover 90% of the debt. They argue that its because of uncertain times - well what happened to all that money we paid in more certain times? Yet again a lack of fiscal management I suspect (or just greed maybe)

What really annoys me is the sheer arrogance of these organisations. There is no advanced warning but an expectation that it's OK to spring increases on customers without notice and when challenged you get back screeds of marketing puff which when condensed down means very little.

Much of this has to do with what I call the tick box culture (see our blog - wordflex.wordgym.com).

My co-director has always described banking as institutionalised theft and I have a colleague who has worked in compliance for many years both here and abroad and concurs with this whole heartedly.

So why are these organisations who appear to be able to gamble with our hard earned money and affect the economy so much, not regulated more to ensure they operate in a reasonable way?

Could it be that because politicians have in the main traditionally gone to banks to work out their remaining years before retirement after their political career has run dry, are not minded to make too many changes that could adversely affect their own future porspects.

OK Rant over :tongue_smilie:

 

[DickW]

I've been pressurising our councillors up here in sunny Aberdeenshire to follow the example of Essex County Council who have set up a sort municipal bank for helping small businesses.

BBC NEWS | England | Essex | Essex councillors set up own bank

Actually if we got all the Scottish councils to collaborate on this then we could set up a Scotland wide national municipal bank and stuff RBS and HBOS etc... Wouldn't that be satisfying !!

 

[Power Lunch Club]

I've been pressurising our councillors up here in sunny Aberdeenshire to follow the example of Essex County Council who have set up a sort municipal bank for helping small businesses.

BBC NEWS | England | Essex | Essex councillors set up own bank

Actually if we got all the Scottish councils to collaborate on this then we could set up a Scotland wide national municipal bank and stuff RBS and HBOS etc... Wouldn't that be satisfying !!

What a brilliant idea...thanks for posting Dick.

Kind regards

 

[Gordon N]

I will be writing a letter to the Northern Scot and Moray Council straight away! What a fantastic idea - is it possible that Moray Council could finally change my opinion of them?? - Probably not, but it's worth a try!

 

[DickW]

Thanks Gordon ..... I would certainly everyone to email their own Councillors about this.

 

[shredder]

How much extra Council Tax should each of us be charged to charge to enable the Councils to (a) raise the capital to lend; (b) cover defaults on bad loans; (c) cover the cost of employing staff with banking experience and putting in place all the procedures, approvals and monitoring they will have to do to make this a reality ?

 

[DickW]

Nothing..... As I understand it, in the Essex case the capital comes from existing funds/reserves, costs will be covered by charges and because the loans will be smallish the risk is relatively low.

 

[shredder]

If there is a default on a loan then the council has lost money which can only be funded by increasing council tax at some point. If they fund a loss from reserves at some point they will have to replenish those reserves.

 

[DickW]

Depends on the size of that loss and whether it will be compensated for later out of earnings...... We're talking something long term here not a short termist, shareholder driven, high returns type outfit like RBS or HBOS (as were).....

 

[SoozG]

If you’re interested in additional information around this topic of whether banks are lending to small businesses then it might be worth taking a look at a post on the Intuit blog here – Are banks lending to small business customers? – which deals specifically with this topic.

Thanks,

Susan

(on behalf on Intuit)

 

[Power Lunch Club]

Thanks for the Susan...however it would have been interesting to see what the lending levels were for the previous two years. I suspect (not that I am an expert in these things) that £271 million is a bit on the small side.