Borrowers Still Have Faith in Bankers Despite High Cost of Credit

LONDON - More than half (55 per cent) of midmarket businesses continue to find the credit process difficult and delayed, despite Alistair Darling’s call for banks to improve lending. And, while finance is expected to become more readily available from a core group of lenders, 46 per cent of borrowers have no confidence that the cost will improve over the next 12 months.

The findings come in a new survey of senior financial decision-makers responsible for banking relationships within UK companies, commissioned by accountants and business advisors, BDO LLP.

Despite a generally pessimistic outlook, with 67 per cent of companies stating that their opinion of banks has deteriorated over the past 12 months, the survey found borrowers still have faith in their own bankers. 85 per cent have experienced no change in their own banking relationship, or it has actually improved, while two thirds (62 per cent) believe that their bank understands the changing needs of their business.

Also, interestingly, the economic downturn has raised the profile of the finance function within the companies surveyed. More than half (53 per cent) say it has become more important and more than a third (37 per cent) believe perceptions are more positive. Further to that, over half (54 per cent) of senior management now see the finance function as delivering better value for the business, primarily through better cost management.

Neil McDaid, Director, Debt Advisory, BDO LLP, commented: “Despite a lack of trust caused in the main by the conduct of investment banks, midmarket businesses retain a strong faith in their own banker. However, the availability and cost of bank debt continues to be a problem for businesses, and an obstacle to economic recovery.

“Our advice to our clients would be to talk to their bank more, and to talk to more banks,” added McDaid. “Our research shows that one in three midmarket companies no longer maintains just one bank relationship. Better communication with credit officers is also of major benefit in providing insights into a business, which will better inform their decision, and use business valuation as a reference point.”

For more information about the survey, visit: w3.cantos.com/09/bdo-908-8zyol/index.php?source=prn

Gill Carson PR Manager Tel: +44-(0)20-7893-2761 Email: gill.carson@bdo.co.uk

Source: BDO

Gill Carson, PR Manager Tel: +44-(0)20-7893-276, Email: gill.carson at bdo.co.uk