Banks urged to ease ‘squeeze’ on firms
THE region’s bank managers have been warned to end a “computer says no” culture dominating their banking decisions or risk squeezing small firms until they go bust.
THE region’s bank managers were yesterday warned to end the “computer says no” culture dominating their banking decisions or risk squeezing small firms until they go bust.
About 60 small business owners and eight MPs from across East Anglia told managers from HSBC, Roayl Bank of Scotland, Barclays, Lloyds TSB and Santander that interest rates were too high and service levels poor, and that loans and overdrafts they had previously been given had been stopped.
The “banking forum”, at Mundford, near Thetford, followed a similar but smaller event in Norwich last year. It was jointly chaired by South West Norfolk MP Elizabeth Truss, who organised the event, and David Ruffley, MP for Bury St Edmunds.
Peter Martin, regional treasurer of the Federation of Small Businesses, said: “Small businesses employ 60% of the people in the country. They are the lifeblood of the country. It seems that from the point of view of our businesses and our customers that the computer says ‘no’.
“If you squeeze the pips until the business goes bust you will have no customers next year. We are talking about businesses which are hard working and are profitable.” He added: “We have seen interest rates increase dramatically despite base rates having gone down.”
But James Cliffe from Barclays said banks were losing money on loans of 2.5% over base rate and they needed to maintain their profitability, while the Little Britain “computer says no” caricature was perception not reality.
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“It is like when I use my computer to write a letter,” he said. “I use spell checker but it is not the answer. The decision is also made by a person.”
Treasury minister and North Norwich MP Chloe Smith said the Government was trying to lower interest rates for small businesses with its loan guarantee scheme, as well as through its business finance partnerships which cut out the banks as lenders.