Our Breakfast meeting discussed the state of the equity and debt markets with CFOs and FDs of high growth businesses across the region. They key takeaway from this discussion for me was that banks won’t start lending just because governments tell them to. They will only do so when their shareholders start asking the banks what their growth prospects are rather than trying to assess their exposure to risk. This happened in the US earlier in the year and this is the sort of trend that the UK will likely follow in fairly quick succession. Until then, companies are forced to wait.
There is something else that is different about the US approach.
In today’s FT article, Phil Cox, Head of Silicon Valley Bank in the UK comments on the difference between US and UK Commercial banks:
“Banks in the US are more used to considering these factors, along with management expertise, when deciding to offer loans, says Phil Cox, head of strategy for Europe and the Middle East at Silicon Valley Bank, which provided Twitter with its first chequebook.
“European banks have more of a penny-pinching attitude to small businesses and less understanding of entrepreneurs, says Mr Cox. “Often, even when a bank has agreed a loan, this will be drip fed, so the company is continuously under a cloud and wondering where its next tranche of funding will come from.”
You can link to the FT article here.
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