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BoE Lending: "Banks are culturally stuck in 2008"

By CreditMan Tuesday, September 30, 2014

Duncan Kreeger, director of lender West One Loans, comments, “In the real economy opportunities are now flowing freely, but traditional lenders are still restricting liquidity. To seize the moment and grow British firms will need finance, yet the mainstream financial system doesn’t seem to have the manoeuvrability to keep up. Banks are culturally stuck in 2008 – while most businesses are already looking forward to a prosperous 2015.

“Large high street lenders are still turning around very slowly from the most defensive of strategies. That’s not really suited to the economic climate of 2014 and expectations for 2015. Particularly for the many of the smallest and most nimble of businesses, the recession that ended almost half a decade ago now feels like history. And that mismatch is most keenly felt in the property industry – bank lending for construction is down almost 7% from this point last year. A lack of homes is already being felt by aspiring households, and at some point a lack of commercial space could have a similar effect on aspiring businesses. Alternative finance is filling the gap, with lending for conversions and refurbishments more than doubling in the last year – but the whole financial system needs to embrace new approaches more quickly.

“Britain’s economic future will be very different to the world of 2007 or 2008. And as the recovery accelerates, the future will be here sooner rather than later.”

Bank of England, Money and Credit, August 2014
· Gross lending (excluding overdrafts) to non-financial businesses was £14.7 billion in August, compared to the average of £15.3 billion over the previous six months

· Within this, gross lending to SMEs was £3.7 billion, compared with the average of £4.3 billion over the previous six months

· Repayments by non-financial businesses were £14.3 billion in August, compared to the average of £16.3 billion over the previous six months

· Within this, repayments by SMEs were £4.1 billion, compared to the average of £4.4 billion over the previous six months

· Net lending – defined as gross lending minus repayments – to large businesses was £0.9 billion in August. Net lending to SMEs was -£0.4 billion

· Lending secured on dwellings increased by £2.3 billion in August, compared to the average monthly increase of £2.1 billion over the previous six months

· The three-month annualised and twelve-month growth rates were 2.1% and 1.7% respectively. Gross lending secured on dwellings was £17.5 billion and repayments were £15.6 billion

· The number of loan approvals for house purchase was 64,212 in August, compared to the average of 65,738 over the previous six months

More from the Bank of England: http://www.bankofengland.co.uk/statistics/documents/mc/2014/aug/moneyandcredit.pdf