The big banks are back in business again, with Barclays and HSBC reporting combined profits of £6bn in investment banking.
But that's for the big boys. Only last week, Chancellor,
Alistair Darling was chastising bank chiefs about the rising cost of loans, even though the interest rate in the UK is 0.5 per cent. Darling is particularly concerned about small businesses (SMEs) and is believed to have threatened banks with a competition enquiry if they do not keep promises to improve lending terms in return for massive support.
As we wrote earlier, many SMEs have an uneasy relationship with their bank, and fear approaching them in case it triggers a rise in charges, or a decision made by a branch manager is reversed by head office.
Now it appears that banks have changed tack, though their policy is uneven, according to Stephen Alambritis of the Federation of Small Businesses. 'We have been pleasantly surprised and quite pleased that banks have started to give money to small business,' he told the
Telegraph on 26 July. 'But in the last two weeks they have started to charge more. The Chancellor needs to be sure they are not opting out of sectors like hotels and tour operators. Banks need to treat individual applications on their merits.'
One solution could be to have a separate SME financing institution. The Tories are
contemplating setting up a fund to help SMEs struggling in a recession, should they come to power in the next election. They need to define the boundaries, and whether decisions would be taken on results to date or the potential of a business.
