HSBC has announced a number of commitments aimed at supporting UK businesses in 2012.

The bank will continue to provide support for businesses which trade or aspire to trade internationally and commits to providing lending facilities to support business growth and job creation.

The bank has confirmed that it met its Merlin lending intentions in 2011, which were agreed with the UK Government, exceeding the full year target to provide £38.8 billion of lending facilities to UK business customers and supplying gross new lending facilities of more than £11.7bn to Small and Medium-sized Enterprises (SMEs).

Having met its Merlin intentions in 2011, HSBC plans to lend even more to SMEs in 2012, providing there is suitable demand. In addition, to reinforce the bank’s strategy to be the leading international trade and business bank, HSBC will further support UK businesses by committing to:

• Recruit around 50 additional International Commercial Managers, ensuring customers involved in overseas trade are fully supported. This will bring the total number of International Commercial Managers to 180;
• Support export trade to the tune of £7 billion through our Trade Finance capabilities;
• Look to manage £30 billion of invoices for customers trading within the UK or internationally, providing critical working capital for these customers;
• Look to approve at least 80 per cent of applications for finance from SMEs; and
• Extend the availability of HSBC’s International Business Overdraft, which offers reduced interest rate for each overseas country a small business is trading with, up to a maximum discount of three per cent for the first 12 months.

Jacques-Emmanuel Blanchet, head of commercial banking UK at HSBC, said: “HSBC is committed to supporting UK business. In 2011, the Merlin intentions gave focus to SME lending, and we continued to enhance our support, launching new innovative products and holding hundreds of events across the UK and the world, to encourage UK businesses to share their knowledge and develop long term relationships internationally.

“In 2012 we will further increase our support for SMEs looking to grow and internationalise, across all sectors and all regions. Many of our customers are experiencing growth by trading in new markets and we are very well placed to support this, through our growing team of specialist International commercial managers and HSBC’s enviable global network, to give UK businesses the best chance of success.”

The Co-operative Bank is to expand its network of banking centres across the country.

The bank has opened a new Corporate Banking Centre in St Albans and another will open in Guildford before the end of year, taking the overall number nationwide to 22. This follows a doubling of the centres from 10 to 20 since 2007.  

The expansion is a key part of its intention to grow its relationship-based approach to commercial banking and it plans to increase its presence further in coming years.

Since 2007, the bank’s commercial lending balances have grown by more than 40 per cent, including £500m specifically to fund renewable energy sector projects.

Deposits from business customers have more than quadrupled from £1.4 billion in 2007 to £6.7 billion by June 2011. 

Keith Alderson, managing director of corporate and business banking at The Co-operative Bank, said: “Throughout a period when many other banks have scaled back support to business customers, we have not just maintained our support but stepped up our commitment.

“The rate of growth in our customer numbers, lending and deposits shows how the Bank is now challenging traditional providers.  A focus on high levels of service, built on developing long-term supportive relationships is resonating with businesses at a time when they really need support from their bank.

“We are continuing to invest to improve our future capability and scale so that we can offer an even better service to a wider range of customers.

“At this time, more than any other, businesses need guidance, advice and the support of their bank whether they are seeking new opportunities to grow or dealing with challenging economic environment.

“And as part of The Co-operative Group we are in a unique position in the market to offer customers access to a broad range of services and expertise spanning sectors from legal services to pharmaceutical care.”

 

Barclays is launching a new national series of business lending clinics designed to bolster business lending by getting small businesses to think about borrowing and give them the confidence to invest for growth.

The clinics launch as recent statistics show that only 15 per cent of businesses applied for borrowing in the last year, reflecting a crisis of confidence among businesses. The research also reveals that while 42 per cent of businesses think they will get a business loan before they apply, 75 per cent actually succeed, indicating that many businesses don’t believe they can get finance.

The first clinic launched by Barclays Retail and Business Banking chief executive Antony Jenkins in Manchester kick started 85 UK-wide clinics, which aim to reach around 1,600 businesses.

Barclays business people will answer key questions on lending and walk businesses through the loan application process, with alternative finance providers on-hand to provide a fully rounded picture of all the financial options available. At the same time, local businesses will have the opportunity to tackle senior bank leaders head-on about the barriers to borrowing that they feel they face.

Antony Jenkins, chief executive, Barclays Retail and Business Banking said: “Barclays is committed to helping revitalise the UK economy which is dependent on small businesses having the confidence to invest and grow.

“Confidence will begin to be restored when businesses are equipped with the belief to make informed decisions about their future.

“Every day Barclays is committed to helping small businesses grow. From the top to the bottom of the UK, our lending clinics will take the mystery out of borrowing for thousands of businesses.”

The banks must not use the reform of the banking sector as an excuse to increase the cost of borrowing once the Independent Commission on Banking (ICB) has laid out its recommendations, says the Federation of Small Businesses (FSB).

It is thought that the ICB, due to report on Monday, will propose that internal ring fences should be put in place to separate the banks’ retail and wholesale divisions and that the banks should increase the amount of capital they hold.

The banking lobby has said that doing this would have a detrimental effect on the amount of money that it can lend and that the cost of finance would increase as a result. They have also said that any reforms now would derail economic recovery.

The banks say that ringfencing will remove the implicit Government guarantee to bail-out a bank that is in trouble and that being required to hold more capital will mean that there is less money to lend.

However, in a new paper, ‘Does bank ringfencing automatically mean an increase in the cost of borrowing?’, the FSB argues that the guarantee would be removed from the investment banking arm and would remain for the retail arm – the section of the bank that lends to people and small businesses.

And, increasing the capital requirements over the medium term and putting a ringfence in place would be beneficial to the structural resilience of the UK banking sector.

If the ICB suggests that capital requirements are raised to more than 10 per cent for example, the FSB recommends reforms be announced as soon as possible but that the banks be given the course of this Parliament to reach those standards. Funding for this increase can be made up from ear-marked profits and reductions in short term incentivised pay.

John Walker, national chairman, Federation of Small Businesses, said:

“The banking sector cannot be too big to fail as the taxpayer cannot afford another bank bail-out. The Government has a golden opportunity to reform the banking sector and it must stand by the promises that it has made.

“The recommendations that the ICB make must be looked at closely and the Government must act on them as soon as possible and ensure they are completed before the end of the next General Election. The Government must use this once in a lifetime opportunity to make the banking sector safer, more competitive and less burdensome on the taxpayer.”

Several banks have announced measures that will help SMEs affected by the recent riots in London, Manchester, the Midlands and elsewhere.

NatWest and RBS will offer customers a range of solutions:

Fast-track requests for temporary credit increases provide short term financing to cover cost of repairs and replacement stock while businesses wait for insurance claims to be paid offer repayment holidays on existing loans to give businesses the breathing space they need to get back on their feet refund or waive overdraft fees incurred as a result of the riots on a case by case base basis. Other banks have announced similar schemes.

Meanwhile, businesses who have suffered damage as a result of the riots need to claim on their insurance quickly or they risk not being able to recover their losses, warns City law firm Reynolds Porter Chamberlain LLP (RPC).

RPC explains that most insurers require claims for riot damage to be notified within a very short period – typically seven days – otherwise the claim may be rejected.

This is because the insurer can make a claim in the policy holder’s name against the police to recover their losses under the Riots (Damages) Act 1886 (RDA). However, to do so that claim must normally be lodged within 14 days of the damage occurring.

Businesses that have suffered riot damage that do not have property insurance can also make a claim to recover their losses directly from the police under the RDA.

Stuart White, partner at RPC, comments: “Riots have caused millions of pounds worth of damage over the last few days.  Businesses that have suffered riot damage should notify their insurer as soon as possible so as to avoid being left without insurance cover. Any delay is an unnecessary risk.”

“Some independent retail units have been completely destroyed by the rioters, making them dependent on recovering the value of the damage to start trading again.”

“The good news for some of the smaller retail units that have been damaged is that even if they do not have a property insurance policy they may be able to recover the value of any damage sustained because of the rioting directly from the police.”

“However the compensation under the RDA will not normally extend to the financial losses of the business while it is unable to trade.  Trading losses are likely to be recoverable only by businesses with business interruption insurance.”

Stuart White adds: “Given the scale of these riots and the current pressure on police budgeting there will doubtless be calls to reform a law that compels police forces to compensate businesses and individuals for riot damage.”

“We will see whether insurers who cover police forces for the cost of RDA claims respond to these riots by pushing up the cost of their insurance.”