The new shape of corporate banking
ADVERTISING PROFILE: Looking Forward to 2011/12
The start of a new financial year is naturally a good moment to pause and consider the potential challenges and opportunities that may arise over the next twelve months. For most businesses in the UK the chances are that the past year will not be mourned too greatly.
While there have undoubtedly been visible signs of recovery - export figures have cheered most observers, while business confidence surveys continue to show growing optimism – challenges remain for businesses in the Thames Valley and Solent region.
Mike Reeves is Regional Director for Santander Corporate Banking in the region. As such, he is in an ideal position to gauge the health of the region and its future prospects. In Reeves’ view, there are a number of factors that will test the mettle and resilience of the region’s businesses in 2011/2012.
“It is clear that access to finance is expected to remain an issue for many companies this year,” says Reeves. “At Santander, we have been actively lending to customers, with lending to SMEs up 26% in 2010, and we are looking to continue to build on this throughout 2011 despite SME lending generally declining by more than 20% last year.”
The good news is that the banking sector as a whole is in recovery and should be more able to meet those needs, and Santander is determined to be the vanguard as demand picks-up. As a leading member of the BBA- led Business Finance Taskforce, Santander and five of its banking counterparts have joined forces to improve relationships with and increase lending to businesses.
In short, the scheme aims to support a network of business mentors and groups; establish clear ways to appeal when loan applications are declined, monitored by an independent reviewer; initiate early refinancing talks; establish and invest in the new £1.5bn business growth fund to provide capital for viable businesses looking to invest and grow; and improve access to trade finance.
Beyond that, the wider economy is showing signs of resilience and has been growing for over a year and at a faster pace than many commentators expected. Chancellor George Osborne recently delivered a budget that Reeves believes will remove one of the most pressing problems affecting the economy.
“It’s so important that businesses have a greater sense of certainty over the future,” he says. “The Chancellor has done his bit by delivering what he described as a budget for
growth; it’s now time for the banks and businesses to take that and run with it.” George Osborne also included measures to simplify the tax regime and reduce the regulatory burden for businesses, which it is hoped will go some way to increasing confidence and clarity for smaller businesses.
But while business investment may well pick up in the next twelve months, Reeves says SMEs still need to make sure they keep a watchful eye on the key indicators.
“There are a few things firms must be aware of: whichever measure you use inflation is above three per cent and despite this being above target, the Bank of England has kept interest rates at a record low for two years now. Even if interest rates were to rise slightly over the coming months they would still be at very low levels and supporting continued economic recovery.
“In addition to that, the cost of capital to all banks (its raw material, in effect) is certainly increasing due to new capital and liquidity requirements being introduced. Both of these factors I believe will increase the cost of borrowing for SMEs.”
However, perhaps the biggest challenge Reeves believes firms will need to meet is the significant public sector cuts that will truly start to bite later on in 2011. “Public sector contracts have in some ways been seen as a safe haven in the last ten years,” says Reeves.
“So the major cuts in public spending won’t just affect those working in the public sector, but also, for example, those service businesses that provide some of the outsourcing projects. Lots of private businesses are exposed to public spending in one form or another, whether direct or indirect, so the bite of the cuts is certain to be felt.”
So what will that mean for the region? “In Thames Valley and Solent region we’re not as exposed to the public sector as perhaps other parts of the country might be, though of course there is a significant Ministry of Defence presence in south Hampshire,” he says.
“On the whole we are fortunate that the region has managed, in the past 10 to 15 years, to encourage the growth of a range of other key sectors. The manufacturing sector is certainly a source of encouragement, which has been largely led by exports where the weakness of the pound has helped. Alongside that there’s been growth in technology and health sector related businesses linked to the region’s very successful universities. Reading, certainly, has come through the slowdown better than other places”
Clearly, while challenges remain, there are plenty of opportunities for businesses in the region. Ultimately, in Reeves’ view, the most pressing concern for SMEs will be how to balance retaining discipline over costs while remaining agile enough to capitalise on the growth opportunities that the next twelve months will present.
“I’d say the mood is one of cautious optimism,” he says “people aren’t getting carried away. And the budget should provide businesses with at least some level of certainty in order to make investment calls.”
In Reeves’ view, one of the key positive elements in the region is that businesses on the whole are very resilient and resourceful. “As always, those businesses that can adjust to a changing environment; take advantage of new markets; and are able to build innovative new products and services will prevail,” he says. “At Santander Corporate Banking we have invested in our local teams and have increased our lending to SMEs across the UK and we will continue to support businesses in the region.”
If your business could benefit from a personal approach to corporate banking contact us today:
Mike Reeves Regional Director, Solent
on 07809 493 592 or email
mike.reeves@
santander.co.uk
Or visit
www.santandercb.co.uk
www.businessmag.co.uk
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – APRIL 2011
TV/SOL MAR 11B
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40