Annual Conference Round Table Discussions – Sources of Finance

At the Annual Conference and AGM, Jonathan Fielding (Marine Associates) and Stephen Reynolds (Barclays Bank) hosted the round table discussion on sources of finance

A brief summary of the topics discussed follows:

Commercial finance:

  • SME’s have a high degree of annoyance at the banks attitude towards them.
  • SME’s believe banks are taking advantage of the change in the economy and making decisions to simply drop thin lending to tighten their book
  • The banks are adopting a take it or leave it approach because there is a lack of competition

Banks have a lack of flexibility in being able to understand SME’s circumstances

  • High levels of frustration at not being able to understand the business needs and viewing SME/Bank relationships as a business deal.
  • Low risk taking by banks – high levels of collateral required
  • High rates despite low overall rates UK wide

Banks are delivering poor service as they re-structure in response to their own downsizing

  • Enquiries being bounced about new departments with little or no service level

Banks appear to be making money out of charges rather than rates as rates are so low.

  • Rates are so low, yet this is not reflected in SME’s costs

The principals of Project Merlin, SWAIN, SWIG and EFG programmes are simply not getting through to SME’s

  • Government PR and spin overtaking the reality of all these projects.

Retail finance
· Lack of retail finance significantly effecting the market
· Lenders in this market have been cut in number
· These lenders don’t appear to wish to lend anything below £25k
· Lenders don’t have the security they need because of the lack of formal registration on smaller craft.

Overall conclusions:-

  • There is a marked lack of understanding by SME’s to the banks requirements, fuelled by the general consensus of opinion that Banks and bankers are bad people.
  • There is a marked lack of commercial understanding by the banks of the flexible and changing nature of SME’s requirements – they are now actually having to work quite hard for their money!
  • Global market conditions, uncertainty and legislations are having a significant impact upon the way that banks can deliver their service
  • There is so much more of this to come!

BMF Actions:-

  • Continue to lobby the BBA, but focus on educating them of the needs of the Marine Sector SME requirements. Just setting the bar of criteria is simply not good enough. Drag them out of their offices and get them to see SME’s difficulties on the ground.
  • Educate membership as to how to deal with the banks. The banks have needs too, and where the both can meet a successful relationship will form.

February 15, 2012