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"Don't vilify the banks", argues lawyer

A corporate recovery lawyer based in the North East has come to the defence of the embattled banks.

Julian Gill, a partner with Newcastle-based law firm Dickinson Dees LLP, believes that the banks have been unfairly made scapegoats as the recession begins to bite.

Mr Gill, who works in the insolvency and corporate recovery department, argues that the banks are facing pressure from all sides and that their room for manoeuvre is limited.

He said: “It has become fashionable to paint the banks as the villains of the recession and it is certainly true that episodes such as Sir Fred Goodwin’s controversial pension do not help their cause. But I believe that attacking the banks is too simplistic and ignores the complexity of the position they find themselves in.

“On the one hand they are being asked to lend more money, which is intrinsically dangerous in challenging economic times, and on the other they are being asked to produce decent rates of return for the taxpayer and the Government, who have bailed many of them out. That is a tremendously difficult balance to strike.

“Of course they have made bad mistakes in the past and of course they must be extremely careful with the money they have been given by us, the taxpayer, but I think it is time that we showed the banks a little more understanding.”

Mr Gill revealed that it was becoming increasingly common for overseas banks to withdraw their credit facilities to British companies, leaving British banks to cover the shortfall. With some British companies facing a bleak future, thanks to cancelled orders and contracting cash flow, this has put the British banks in a difficult position.

“Banks are now having to price for risk. That means their charges are higher than normal. No doubt, when the recession starts to show signs of easing and the risk lessens, the banks will act accordingly,” he said.

This was posted in Bdaily's Members' News section by Ruth Mitchell .