How the world has changed!

Many years ago as a young ambitious Bank Manager I had a letter published in the Bankers Magazine ranting about the inadequacies of the 'old' Captain Mainwaring style Bank Managers who whined on and on about the quality of Bank Managers - things are not like they used to be when the local Branch Manager knew all his customers by name.

I now find myself in a similar position - my experiences over the last week or two leave me in despair in respect of the way the Banks are now treating their customers.

There seems to be very little analysis of their clients business, little attempt to really understand repayment source and a total focus on the security available and the ability of the client to support any borrowing with personal guarantees.

In the old days PARSER was the pneumonic we used to follow:-

i)Person -know your customer,

ii) Amount - how much do they want to borrow?

iii) Repayment - how would it be repaid?

iv) Security - if the above are satisfactory what security is available in case a problem arises?

v) Expediency - any other reason why we should do it?

vi) Remuneration - what will we charge by way of margin and fees?

The new model seems to be WAM 'What's in it for us and how can we maximise return without taking any risk?'

I have recently spoken to a number of Banks on behalf of prospective clients and the focus has invariably seemed to be to minimise Loan to Value and tie in the client totally with personal guarantees - what chance does a start-up or relatively new and growing business have to get bank finance. YET the Banks still insist that the majority of applications for new facilities are being approved.

On the back of my recent experience a more pertinent question is - how many businesses no longer approach their banks for help and assistance as they know it will be a waste of time?

I spent 30 years on the other side of the desk and I saw numerous business plans that simply did not stack up BUT we did take some risk and we did get it right far more often than we got it wrong. However, that meant we had to understand our customer, their business and their market - it is disappointing how little time is now taken to understand these issues.

Sadly, the SME market is slowly being squeezed as a result of the controls introduced to recoup the the losses made as a result of the excesses of, and the failure of the Banks to control the 'Boys in the City' - the Masters of the Universe who made money despite themselves - the ones who did not understand their product, their clients or the market and had no care for the risks they were taking.

The Banks have the prerogative to choose whether to lend or not but please let's have no more platitudes - admit that there is no appetite to support the SME market in a way that will help it thrive!

Please tell me that I am simply and old and embittered banker who sees the past through rose tinted spectacles - I would really like it to be proved that I am wrong!