The banks’ age-old argument may be that there isn’t enough demand for loans among SMEs, but a survey we covered earlier this week suggests otherwise: according to figures by comparison site Make It Cheaper, almost half of entrepreneurs have had to turn to alternative sources of funding to help keep their business afloat. Just over a quarter had to turn to family and friends, while 13% even went as far as to remortgage their house.
So banks’ excuses are beginning to sound a bit lame. Particularly when you take into account a report by Sky News’ Mark Kleinman, who says he’s discovered banks will be doing all they can to avoid another deal like Merlin next year. Apparently, the five banks which took part in this year’s agreement have got together to ‘map out a united position’ to take on the Government if it tries to persuade them to go ahead with another deal, on the grounds that it’s ‘anti-competitive’.
Apparently, the banks’ main objections are to the extra agreements they had to make as part of Project Merlin – a one-off contribution to the Big Society Bank, for example, as well as a payment to the Government’s Business Growth Fund, aimed at small businesses. They’re also none too keen on the commitments they were forced to make on bonuses, saying it makes it difficult to compete with US and European rivals.
But although they’re willing to accept that in all likelihood, they’ll still have to make lending commitments, banking bosses are reportedly not happy about it. Stuart Gulliver, the CEO of HSBC, reportedly told Kleinman that lending targets are ‘dangerous’ and risk triggering a surge in bad loans, while another (anonymous) banking chief said: ‘My sense is that there would be little desire to repeat it from any of the participants.’
No decision will be made until after the Independent Commission on Banking’s final recommendations are published in mid-September. So let’s hope they’ve got something persuasive up their wizard’s sleeve…