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Lord Green: Banks admit business lending issues

Date Added: 15/01/2013  

The UK's banks admit they have made mistakes with business lending decisions, it has been noted by the former chairman of HSBC Lord Green.

Government trade minister Lord Green revealed in front of a House of Lords Committee that the rise of so-called "casino" investment banking has led to lenders deskilling their commercial banking businesses.

According to a report by the Daily Telegraph, Lord Green stated banks are aware that this has happened and it has had an impact on the business lending decisions they have made.

"If you're a bright, ambitious young banker, what did you want to do at any point over the past ten or 20 years? You didn't want to be the relationship manager in Rotherham, it was head to Canary Wharf," he said, noting that business lending has been affected by the attraction of investment over business banking.

Lord Green added: "Over time they [lost] strong talent in business banking. The central risk management function responds by disempowering them and you get into this downward spiral."

It was noted by the government's trade minister that he has seen "enough" evidence that there are "extraordinary" business lending decisions being made on a regular basis by banks.

Anthony Browne, the chief executive of the British Bankers' Association, recently argued that there is an "ethical blindness" to the way banks in the UK are operating at the present time.

He also noted that it was an "obvious fact" that the Libor scandal had hit public trust in the banks over the course of the last few months.

Jason Napier, an analyst for Deutsche Bank, recently said in an interview with the Economist that people have to be realistic about the impact programmes such as the Funding for Lending Scheme are going to have on the state of business lending in the UK.

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Posted by Michael Beam

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