Partner Article

Is the Business Bank just an elastoplast?

This week I spoke to the one of the senior civil servants involved in piecing together the Government’s new ‘Business Bank.’ The aim is to feed funding products through new and traditional finance routes.

Those traditional routes will include high street banks - but is this worthwhile at all? Earlier this month we discovered the Government’s Funding for Lending scheme has failed to spur lending through traditional channels - and perhaps this was the final nail in the coffin of this lending generation.

As we all know, there appears to be a disconnect between the banks and SMEs. One says they’re lending and the other says they’re not. Some commentators suggest the banks need to get back to a ‘golden age’ of community banking with strong bank manager-entrepreneur relationships - a time when regional businesses cultivated a strong relationship with their banks.

Whether you believe this or not, the alluringly lucrative investment banking sector has undoubtedly put paid to traditional forms of lending to SMEs.

Until the model changes completely, is the Business Bank just going to be an elastoplast on the crumbling model of regional banking in the UK?

This was posted in Bdaily's Members' News section by Tom Keighley .