CFI: Commercial
Banking system holds key to by
Rob Lankey, managing director, Commercial Mortgages, Aldermore
Many people, bankers includ- ed, would dearly love banks to adopt a lower media profi le in 2013. T e woes of the banking industry have dominated the headlines for far too long. Banking is a critical com-
The ‘can-do’ approach to commercial mortgages
Combine years of specialist experience with a can-do approach and you have a commercial mortgage lender that relates to your clients’ needs better than anyone. Delivering regulated and unregulated mortgages that match the specific needs of your SME clients and property investors across a wide range of property types.
So, rather than offering ‘off the shelf’ mortgages, we’re happy to provide mortgages for customers who break the mould. Which is a big tick in the box for brokers.
ponent in Britain’s plans for economic recovery and, for that reason, there seems little likelihood that banks will be allowed to step back from the media spotlight.
Life support Banks are to British busi- nesses what fuel is to a car. One without the other ren- ders it impotent to make any progress. It’s therefore not dif- fi cult to see why the Bank of England has been willing to pump billions of pounds into the fi nancial system in the form of quantitative easing and schemes such as Funding for Lending, in order to help the economy generate some forward momentum. T ere is speculation that
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the Bank of England may pause quantitative easing in order to be able to assess the impact of Funding for Lend- ing. However, it may not be a good idea to turn off the life support machine just yet to see if the patient is capable of breathing by itself. If the ex- periment fails, they then we’re back to square one and the road to recover will be even longer and harder than is al- ready being forecast. T e big banks continue to face problems of their
40 MORTGAGE INTRODUCER JANUARY 2013
own which means that their ability to support British busi- ness is limited. T ey have bloated balance sheets and capital constraints which, with the best will in the world, means they cannot satisfy businesses insatiable demand for funding.
“Approximately half of the total £212bn outstanding balance sheet debt secured against UK property is at unrefinanceable LTVs in the current market”
To compound the problem,
approximately half of the total £212bn outstanding balance sheet debt secured against UK property is at unrefi nanceable LTVs in the current market. Unfortunately, approximately three-quarters of the debt is due to mature over the course of the next two years, which comes at the worst possible time. So what is the solution;
what does this mean for busi- ness and property investors seeking funding? T e answer is that both
groups need to be realistic. Businesses with maturing loan agreements should not assume that the deals can eas- ily be rolled-over on terms that are as favourable as those originally negotiated. Regret- tably, there is plenty of anec- dotal evidence of perfectly profi table businesses being let down by banks with whom
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