Banks Willing To Lend But Firms Not Borrowing

Fri, 17 Sep 2010

A top banker has hit back at accusations from West Midland industrial firms that they are still facing major difficulties in accessing bank finance, claiming that manufacturers don’t want to borrow to invest .

Earlier this month, the chief executive of the Manufacturing Advisory Service West Midlands, Simon Griffiths, said businesses in the region were being affected by a lack of bank lending, despite the recent upturn in profits at the major UK banks .

But Ray O’Donoghue, managing director of Barclays Corporate in the West Midlands, said low business lending was due to a "lack of appetite" for credit among firms.

"Companies that are still in the sector are holding their own and doing reasonably well," he said.

"There’s a bit of consolidation and a bit of growth in export markets. But we’re not seeing a lot of investment, people are not investing for expansion and investment is as low as I can remember it."

"People have battoned down the hatches. There’s not the demand for finance because people, quite rightly, are preferring to go liquid and focus on their cash."

He added: "The other tell-tale sign is I’m also seeing headroom in the limits that I’ve got. You’ve got companies who have got limits but they are not fully drawing them."

" Lending conditions have tightened but I genuinely think demand for finance has come off."
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