Banks ‘open for business’ despite euro crisis

But Angela Knight warned that “no-one should be sanguine” about the sovereign debt crisis which unless contained and properly dealt with could spread to the UK and the rest of the world.

She made the comments in an interview with the Yorkshire Post ahead of a finance roadshow next week when senior representatives from Britain’s biggest banks will visit Leeds to speak to small business owners about the help and services available to them.

Ms Knight, a former Sheffield councillor, admitted that banks “have a long way to go” to fully restore trust and blamed regulation for the lack of competition in the sector.

She claimed that movements like the Occupy Wall Street protests against financial greed don’t change anything but added that it is “really critical” to deal with high unemployment, particularly among graduates leaving university with lots of debt.

Ms Knight said British banks do not need recapitalising after taking “very difficult, very public and very aggressive early action” following the original credit crisis.

Stress-testing of British banks in 2008-09 was also much tougher than similar exercises carried out in Europe, she added.

Ms Knight told the Yorkshire Post: “The sovereign debt crisis has almost closed capital markets for some of the eurozone.

“In the eurozone, it means more finance is via the facilities of the European Central Bank than would otherwise be the case.

“The capital markets remain open for UK banks. They are seen to have taken the steps that are necessary. We don’t have the exposure to the eurozone where the concerns are high.

“The UK Government actions on debt and the fiscal stance are deemed to be credible. The capital market difficulties of the eurozone stay there at the moment.

“We all have the worry that unless... properly contained and acted upon that we will start to see the problem spread wider than it is at the moment.”

She added: “What we have got are economies that are interconnected because we export to other European countries.

“There’s a huge worry in other parts of the world, such as the United States and South East Asia, about what is deemed to be lack of sufficient action by the eurozone.

“That can affect us all irrespective of whether we are in New York, London, Singapore or Tokyo.”

Ms Knight will be one of the speakers at next Tuesday’s roadshow. It will be hosted by the Better Business Finance Campaign and promises to provide SMEs with access to support from the UK’s five largest high street banks.

The campaign aims to help small businesses understand how bankers made lending decisions and what sources of finance are available and how to present the best possible funding application.

There will also be information about the £2.5bn Business Growth Fund, the new equity investment fund backed by the main UK banks, and advice on how mentors can help support small businesses as they grow.

Speakers and panellists include senior figures from Lloyds Banking Group, Santander UK, Barclays, HSBC and Royal Bank of Scotland.

Ms Knight denied that the roadshow was a gimmick.

“This is for-real stuff. Businesses can get to the people who run the whole small business lending in banks and who are running the regional part of it.”

Ms Knight added: “There are all sorts of issues around but banks are open for business. Banks are about lending money; they are not about not lending money.”

Alternatives on the high street

Government ministers often talk about the importance of increasing competition in the banking sector.

They see it as a crucial way of improving financial services for businesses and households.

Angela Knight of the BBA said she would welcome more competition in the high street.

But she added: “Expensive and significant regulation is what has concentrated banking. The sheer cost of it has pulled it together.”

Ms Knight said Yorkshire Bank, The Co-operative Bank and Handelsbanken provide alternatives for customers.

To attend Tuesday’s roadshow, visit www.betterbusinessfinance.co.uk