“It would not be responsible of the banks to lend to poor and failing businesses,” says Rimmer, UK and Ireland chief executive of Bibby Financial Services. “Banks are being governed to rebuild their reserves and balance sheets and start lending more money. However, practically, this is nigh on impossible during a recession when the number of failed business is up 50 per cent year on year.
“Given that the last few years saw one of the longest bull markets, over-zealous lending and too-cheap money being lent to the wrong sort of businesses, it is not particularly helpful to make comparisons with previous years when the recession is continuing to bite,” he continues. “Indeed, lending statistics from 2006 and 2007 are so far at the end of the scale they are just as unrealistic.”
Rimmer says the real problem is for medium businesses. “Growing pressure is on the banks (particularly RBS and Lloyds, in which the government hold a large stake) to free-up credit for small businesses. However, the slightly larger business that fall into the ‘medium’ end of the scale – likely to be the more stable businesses – are still struggling to access cash and refinance at competitive rates.”
He reckons the government is far too obsessed with reacting to negative news rather than developing a real understanding of what is actually going on within the various areas of commerce. “Rather than continuing to hammer the banks, I would suggest a better approach would be to set up a robust taskforce of real business people with the relevant experience to act in a clear and concise advisory capacity.”