Has banking Changed?



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At the leadership forum held last Friday in Chandos House, Bob Silk of Barclay’s Bank shared his views on the banking crisis and where to the market was heading to next

In an entertaining and lively presentation, Bob candidly discussed the issues that led to the financial crisis. He made many valid and thought provoking points:

  • The roots of the crisis lie in the long boom period. It is a natural progression that the better the boom, the worse the crash.
  • Banks make their money via lending and as the boom continued, that greater and greater risks would be taken was bound to happen.
  • It is also, simply, the way of the World that during a boom period, banks lend money more easily but when crisis hits, credit controllers within banks became more influential and the mindset for lending changes.
  • Business will recover. New bankers will come up through the ranks. And mistakes will be made again.

“If people learned from others’ mistakes then we would have learned from the crash in the 30’s; the drought in the 70s and the boom in the 80s followed by the bust in the 90s…”

  • The market is gradually recovering but it will take two-three years to truly recover.
  • There will be many businesses that fail as the market recovers as their cash flows will not be able to meet demand. This is normal in the cycle.
  • The market will continue to be very testing and only those businesses that are truly competitive and strong will come through well.
  • Despite what many have said and written the relationships with banks and their customers will remain the same. Both need the other. The key to get the best out of one’s bank is to communicate with accurate information so that the bank feels that it can trust the information and the company that is providing it.

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The Discussion…

It wasn’t just the bankers …

  • Banks are an easy target. When it goes wrong they’re easily blamed. Actually the borrower is just as much at fault.
  • Just because debt is available doesn’t mean it’s suitable

Now is the time of the entrepreneur

  • Now is the time for the right people and the right businesses to have a bit of a flutter. Banks, culturally, struggle with this – it’s up to individuals and business.


The road to recovery

  • Time heals all wounds
  • The next two years will hurt while the economy recuperates, but it will happen
  • In the initial stages after the credit crunch started loans were cut from 5 to 3 years. Now they’re back up to 5 again – but don’t expect them to be extended any longer

Back to basics for bankers themselves.

  • There are benefits to allowing people to falter, so that they may learn a lesson – and remember it.
  • Part of the problem has been that many businesses have had bright graduates who have been given relatively high powered positions with no industry experience. Therefore, those with a lack of real experience have made decisions that have influenced businesses. This is one of the results of such an extended period of growth,

Expect the unexpected

  • Bankers, along with everyone else, must understand that everything in a budget can be planned for, except what wasn’t built in to the time line or anticipated costs.
  • Nothing has ever come in on time and nothing has ever come in on budget.


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