Monday 4 February 2013

... or investors could just invest directly in businesses.

From City AM:

But banks warned that hanging this [empty] threat over the industry cannot be good for long-term prosperity.

"This will create uncertainty for investors, making it more difficult for banks to raise capital which will ultimately mean that banks will have less money to lend to businesses," said Anthony Browne, chief of the British Bankers’ Association.

"What banks and business need is regulatory certainty so that banks can get on with what they want to do, which is help the economy grow. This decision will damage London’s attractiveness as a global financial centre."


The added irony being that of all bank lending, less than ten per cent is to "businesses", ninety per cent of it is mortgages secured on land.

6 comments:

Lola said...

Are they genuinely stupid? Or are theyr really devious? Or are they happy to try and get away with this knowing that a majority (getting smaller by the second) still believe this drivel?

Mark Wadsworth said...

L, I don't know, but they keep getting away with it, i.e. Funding for Lending Scheme => deposit interest rates down by 1%.

There's some grumbling in the ranks, but mainly against "greedy bankers" and not "politicians who work on behalf of greedy bankers".

Tim Almond said...

And of that 10%, most is based on security (i.e. premises, equipment etc).

The next Facebook/ARM will not come from bank lending.

Mark Wadsworth said...

TS, there's nothing wrong with secured lending on plant and machinery or debt factoring etc. I'd consider that to be true "lending to businesses".

But the figure for non-land based lending is so dwindingly small that nobody knows what it is (1% of all lending? 5%? Certainly less than 10%).

Bayard said...

"so that banks can get on with what they want to do, which is help the economy grow"

Ha ha! When have banks ever wanted to "help the economy grow"? All they have ever wanted to do is lend more money at greater interest rate differentials. In any case, business wanting to grow should view the banks as a last resort, as they are the most expensive way of raising money and always make sure they never have any skin in the game. I know by direct experience how bank loans can suck enough profits out of a business to prevent any growth whatsoever. However, banks have business just where they want it: despite the fact that most investors would be overjoyed with the rate of return that banks get on their loans, there is very little money around as it is all tied up in overpriced housing.

Lola said...

Bayard. Quite. The economy growing is an accidental - market - benefit of their greed. They are not at all interested in whether the economy grows or not. They want to make a turn on borrowing and lending. This sort of talk defies belief...