Worthing & Adur Chamber Of Commerce - Bank of England has a message for Town Firms

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Bank of England has a message for Town Firms

24 June 2015 4:13 PM | Tracie Davey (Administrator)

Bank of England has a message for Town Firms

The Bank of England's role has changed significantly

Tom Henderson, Deputy Agent for Greater London outlined the drivers for change, the changes in the Bank's responsibilities and powers, and their impact on the business community at a recent breakfast meeting, hosted by the Worthing and Adur Chamber of Commerce at the Ardington Hotel, attended by a select number of local business leaders.

Tom gave a brief introduction to the Bank and its two main policy bodies, the Monetary Policy Committee and the Financial Policy Committee. An explanation was given of the MPC’s role in inflation targeting and the FPC’s role in Macro prudential supervision and the distinction between Maco-Pru and Micro-Pru, or firm level supervision, which is the Prudential regulation Authorities role (the PRA are part of the Bank). Tom touched on the international nature of banking regulation and on the Basel framework’s role in causing Banks to hold more capital and to better assess the risks in their lending. Tom emphasised the policy maker’s view, the well capitalised banks are now in a better position to lend.

Tom also explained that businesses saw credit conditions being quite different for firms of different sizes: big firms report very easy conditions with the banks, and all sorts of other lenders, very willing to fund them; but as firm size reduces conditions become tougher with the very smallest micro firms struggling to find funding.

There was a round table discussion of credit conditions. Tom questioned if there was some sort of natural selection process through the downturn – are those left those who had a bias against borrowing, or at least high levels of gearing? Most businesses agreed that this was happening.

An interesting discussion ensued and it became clear that established firms, with a decent trading history and who were owner occupiers, or had other significant collateral, found lending conditions easy but that even successful high growth younger firms found borrowing very difficult, and that this was not helped by the very slow and tortuous credit assessment process of the high street banks.

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