0 Comments | Herald, The; Glasgow (UK), Jul 12, 2010
THE man ultimately responsible for 40% of small business lending in Scotland yesterday has admitted getting tougher with would-be borrowers.
Peter Ibbetson, chairman of business lending at the Royal Bank of Scotland, said his institution was right to go over the books of companies like never before in recent times.
In an exclusive interview with The Herald, he said: “It’s right we should ask for cash-flow forecasts and debtors’ spreads. But that is for the benefit of the business as much as the benefit of the bank.”
Ibbetson insisted that a get-tough attitude did not account for what he called his bank’s broadly flat book of loans to small and medium-sized enterprises across the UK. Royal Bank of Scotland committed pound(s)10 billion across Britain in new lending, matching trends for 2009, when it dished out pound(s)40bn in credit to small businesses.
He said new lending was not growing because businesses were reluctant to invest during the recession, citing a 40% reduction in “white van” registrations last year as evidence for his case.
“There is pretty clear evidence that businesses are reluctant to invest,” he said. “We are seeing about a quarter fewer come to us for finance and those that are coming are asking for a quarter less than they would normally ask from us.”
Businesses, like households, have been paying down debt during the recession. RBS alone has pound(s)50bn in sanctioned credit that has not been taken up by firms, Ibbetson said.
“We are firmly open for business and very keen for businesses to come and talk to us,” he added. “We have plenty of money to lend to viable businesses.”
He denied claims in the business community that high interest rates were putting off businesses from borrowing.
He said: “The risk margins have gone up by 1% across all the banks
small business bank accounts