The Irish Hotel Federation has today expressed concerns about the announcement from Lloyds Bank that its Bank of Scotland Ireland offshoot is to close. The Federation confirmed that Bank of Scotland Ireland provides around 20% of current outstanding loans to the Irish hotel sector and as such around 150 hotels are under significant financial threat. So what can the authorities do?
A report by the Bank of England has today cast an enormous shadow over the UK banking arena with news that £50 billion was repaid to the UK banking industry by small businesses between July 2009 and June of 2010. This means that in simple terms the UK banking arena received a net £50 billion from UK businesses at a time when more and more businesses are in desperate need of money to survive. So how can the UK banking arena justify this?
Over the last few months we have seen a gradual reduction in the amount of finance made available to the UK small business arena which is causing many problems for many business people. A number of people are now asking the question as to whether the UK business arena is now dead and entrepreneurs are now looking elsewhere?
The Royal Bank of Scotland has today announced the sale of a €1.4 billion loan book to fund manager Intermediate Capital Group as the company looks to downsize its non-core operations. This is just the latest in a long line of deals which the company has announced to allow the 83% taxpayer owned operation to concentrate on its core operations.
The worldwide sovereign debt market is struggling to digest the problems within the Irish economy and today we saw the cost of insuring Irish sovereign debt increase to 300 basis points. There is now major concern regarding the recapitalisation of the Irish banking sector which has suffered more than most during the credit crunch and the worldwide recession. The Irish Central Bank this week suggested that a total of €25 billion could be required to stabilise the Anglo Irish Bank Corp. which was taken under government control when it nearly collapsed.
The Private Financial Initiative (PFI) program set up by previous governments looks set to saddle the NHS, along with other government departments, with enormous financial liabilities in the future. It was revealed today that the total bill for new hospitals in the UK will reach £65 billion despite the fact the projects were valued at just over £11 billion upon inception. While there are obviously maintenance, cleaning and catering costs to be taken into account there's no doubt that these "PFI mortgages" are coming back to haunt the authorities.
Barclays Bank has today revealed the company will not sign up to any future government scheme whereby a certain amount of money must be made available for the small business market. The company believes that having a definitive target regarding the amount of money available to the small business arena could lead to irresponsible lending as banks are forced to chase lending targets towards the end of the program.
As more and more people in the UK continue to struggle with their monthly budgets a number are now starting to look at consolidation loans as a means of taking away some of the short-term pressure. But do consolidation loans actually work?
Stephen Green, the chairman of the British Bankers Association and HSBC, has this week written to George Osborne outlining the creation of a new task force to examine the lack of lending to UK small businesses. The chief executives of Barclays, HSBC, Lloyds bank, Santander, Royal Bank of Scotland and Standard Chartered will play a major role in the steering group as complaints about a lack of funding for small businesses in the UK increased by 120% over the last year.
The very fact that Lloyds bank has bounced back from a significant loss in the first six months of 2009 to a profit of £1.6 billion during the first six months of 2010 has not gone unnoticed in the UK financial press. While the company was pretty keen to confirm that £24 billion in loans has been granted to the UK business arena, further investigation of the figures shows that a similar amount was repaid by borrowers over the same period. So ultimately, despite the fact that new business approaching £24 billion was written during the first six months of 2010, lending is flat at Lloyds bank!
