It is hugely frustrating for all of us keen to support British businesses in accessing finance at the current time. I will not be negative about the CBILS because everyone seems to be doing their best (particularly front-line bankers) but a better way has to be found for ‘next time’ (and there obviously will be a ‘next time’ one-day).
For what it is worth here are my thoughts on a workable model:
- A separate Bank – stakeholders being HM Gov and any lender that wants to participate. The balance sheet would be ‘ring-fenced’ and lenders would be insulated from impact on their sensitive performance ratios (from increased risk)
- Capital to be provided by stakeholders.
- A ‘dormant’ bank can be used to get this set-up to fast-track it (I think ‘British Linen Bank’ may still be on a dusty shelf in Lloyd’s Bank basement for example?)
- A fintech participant puts the front-end application process together – they have slick systems which would streamline the initial process.
- A ‘reservist’ list of bankers (seconded from the participants) and ex-bankers (loads of us about still with the skills) and accountants/business advisers can be pulled in on temp contracts whilst needed at peak levels. Then stood down later.
- Loan book monitoring systems also provided by fintech – automating much of the work in controlling the lending during term (so low permanent staff costs).
- One set of loan criteria which HM Government can ensure gets translated properly from concept to front line – and without the various versions that take a couple of weeks or so for several banks to decide upon for their own customers.
- Underwriting policy to be just that bit more relaxed (‘this one looks worthy of support even if it doesn’t fit the normal models’) but just as important, it would be consistent.
- Pricing can be set and controlled with consistency
- Website that could go live in 24 hours…
- The banks would not be dragged down by the volumes of work, disrupting ‘business as usual’.
- The banks would also not be ‘hung, drawn and quartered’ reputationally for not being able to deliver (perhaps allowing them to even pay dividends?)
- The Government can take massive credit for getting the system to work
- Most importantly of course, businesses needing the money actually get it, quickly
- When the crisis is over this can be ‘put on ice’ ready for the next time!
I’ve been in this business long enough to have experience of the SFLGS, EFG and ‘Humpty Falling Off The Wall’ last time. When I heard that they were forming ‘The British Business Bank’ in November 2014 I actually thought this was what it was going to be – and foolishly thought that someone had read my blog of 8th March 2013. But perhaps next time…..