What an odd idea

As small businesses complain that banks have been useless so far in the crisis, is the City missing its chance to atone?
Reluctance to comply with emergency loan package compounds unfavourable image

The oddity being this thought that the retail banks – which is who deals with small business – are part of The City. The City being the wholesale markets. Where the retail banks do gain their own financing, sure, but they really are retail, not wholesale, and thus part of the financial sector which is not The City.

2 thoughts on “What an odd idea”

  1. The loan guarantee was never set up as a scheme under which businesses could go along and say “can I have some money because I need it”. It merely meant that if you had a good business plan and argument for a loan but didn’t have any security to offer, the government would provide that security. It’s the ‘good business plan’ bit that seems to have been missed in some quarters.

    Meanwhile and off-topic, the Salmnond saga rumbles on as “In a joint statement, issued through Rape Crisis Scotland, the nine women said: “While we are devastated by the verdict, we will not let it define us.”

    It’s odd that ‘Rape crisis Scotland” is involved because none of the women were raped. Or even sexually assaulted. We know this because the court said so. After all, if Salmond had been convicted, his guilt would have been carved in stone and there would be no chance or arguing otherwise. No doubt that the events took place. But he wasn’t found guilty and so the events didn’t happen.

    Although of course that’s not how this will accepted by some. To them, if guilty the events happened, if not guilty the events happened but he ‘got away with it’.

  2. “Why should banks be expected to advance uneconomic loans?” says Ian Gordon, a banks’ analyst at Investec. “If the Government wants to advance high-risk loans and is only willing to provide an 80pc guarantee, then in my view it is perfectly reasonable for banks to expect adequate security to secure their exposure.”

    One thing that most of the public never grasps about banks is that they generally lend secured against assets. You own a shop? They’ll lend against that shop. Business goes tits up and the shop is theirs. But they aren’t keen on lending much otherwise. They don’t want to pour money into a salary hole forever.

    There’s going to be some good businesses that are going to suffer and perhaps fail with Covid-19, but there’s also going to be some crap that goes too. Businesses that were already on the edge, businesses that have no cash reserves. I suspect the survivors are generally going to be the more careful ones, the ones with strong customer loyalty and the ones that are working to adapt to all of this.

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