Credit check

SOME perspective is required over the latest bank lending figures. Having been accused of being reckless prior to the credit crunch, it is now claimed that these financial institutions are being too cautious as Britain struggles to gain any economic momentum.
By The Newsroom
Published 24th May 2011, 07:00 BST

It is a dilemma that has become even more profound after new figures, albeit data based on lending over one quarter, suggested that the banks might not increase lending to small businesses to £76bn over the course of this year – the amount specified by Project Merlin.

Yet, while the British Bankers’ Association suggested that muted demand was behind the failure to meet lending targets, the difficulties are not helped by banks centralising services at remote offices rather than encouraging branch managers to develop a close relationship with borrowers.

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If they employed more people in local branches as they did in the past, and placed a premium on exacting levels of customer care, banks might be able to lend money with more confidence, and on a case-by-case basis.

They would certainly understand their client’s business and the precise reasons why the firm in question was requiring a loan. They would be able to take account of these factors rather than inputting data into a computer and allowing the machine’s verdict to, in some instances, determine whether a viable firm can remain in business – or not.

A successful end to this impasse is now critical to bringing about a new era of economic growth, and the banks can assist this process by reviving practices that served them, and their clients, so well in the past.

Related topics:Britain