Banks behaving badly, yet again: what they need are steadier relationships

Martin Vander Weyer’s Any Other Business

It’s nonsense to accuse high street banks of failing to lend to businesses because the money they might have lent has been siphoned off for bonuses — that just isn’t how it works — and it’s good news that they have been announcing restored or increased profits this week. It’s also absurd to claim that George Osborne and Vince Cable should or could instruct them how to lend. And in any case, an optimist might say, the indicators are moving in the right direction: what with higher than expected growth in the second quarter, an uptick in manufacturing and a wave of investment in retail banking signalled by the opening of Metro Bank and the purchase of 318 Lloyds branches by Santander, the cycle seems to be turning exactly as it should. Businesses with decent prospects, large or small, new or old, will gradually find a warmer welcome from the banks as recovery gathers pace, while depositors’ (and taxpayers’) money is safeguarded by not lending it to wastrels and losers.

So far so good — as long as you’re not a double-dip doomster, which by nature I’m not. But the charge which really sticks against the banks is that, as the cycle has turned, they have treated business customers with the same brutal insensitivity that earned them such opprobrium in the recession of the early 1990s. It was then that the concept of ‘loyalty’ in banking was lost, and nothing seems to have been learned since: you might have kept your accounts with the same branch for 50 years and played golf with the manager for almost as long, but when head office tells him to stop lending to your sector, he’ll cripple your business without a word of apology.