Lord Mayor urges banks to lend to SMEs

Michael Bear, Lord Mayor of the City of London, also warned against piling more costs on the financial services companies through excessive regulation.

After meeting financiers, lawyers and academics, he told the Yorkshire Post: "There are different specialisations and USPs in different regions. There needs to be a concerted effort to make sure that there is an incentive to grow business and that SMEs, which are going to be the main engine, are targeted, and that banks do lend working capital to businesses that want to grow.

"I see the banks having a key role in stimulating that process of growth. We put huge pressure on the banks to release more funds for the SME sector – obviously on a prudent basis. At the same time, we are telling regulators and the Government that they need to be aware of the conflict between increasing capital buffers and the requirement to lend.

"We have got a balance between safety, entrepreneurship and lending."

Mr Bear, a civil engineer by trade, said there was a need for reform of the financial services sector but argued that simply creating more rules was not the answer. He said banks were living in an "uncertain" world and were probably keeping back some reserves in case capital ratios had to be increased.

"We need smarter, better regulation but too much bureaucracy just adds to the cost of doing business. The other thing we need to do is address skills, and I think you do it historically very well in Leeds."

Mr Bear's two-day trip, which finished yesterday, was organised with Financial Leeds and included sessions with Marketing Leeds and Leeds Legal as well as the University of Leeds and Leeds Metropolitan University.

He said the city's skills in these areas and in particular markets, such as intellectual property law and advising on mergers and acquisitions, meant it was well placed to compete internationally.