Bri­tish Busi­ness Bank ‘should in­crease in­flu­ence’ in cor­po­rate life

The Daily Telegraph - Business - - Business - By Tom Rees

THE state-owned Bri­tish Busi­ness Bank must play a greater role in postCovid cor­po­rate life as tax­payer sup­port be­comes vi­tal for prop­ping up the econ­omy, its found­ing chair­man has said.

The raft of tax­payer-backed emer­gency loan schemes ad­min­is­tered by the or­gan­i­sa­tion should be ex­tended be­yond their cur­rent Septem­ber cut­off date if they are still needed, ac­cord­ing to Ron Emer­son.

The schemes have fun­nelled £47.9bn to strug­gling firms since the dis­as­ter struck, with the cash handed out by banks on the un­der­stand­ing that the Trea­sury will cover the vast ma­jor­ity of their losses if bor­row­ers de­fault. This process was over­seen by the BBB, which was set up af­ter the fi­nan­cial cri­sis to help small and medium-sized businesses.

Mr Emer­son, who led the or­gan­i­sa­tion for three years and is now chair­man of lender B-North, said: “What we are see­ing is a dif­fer­ent eco­nomic world where the role of gov­ern­ment is go­ing to be cen­tral in the way the econ­omy works. What [Covid-19] has raised is the whole is­sue of fi­nan­cial in­fra­struc­ture in this coun­try across the board, and is it fit for pur­pose for the 21st cen­tury.”

The BBB was ini­tially crit­i­cised by some large banks for slow­ing down the process of dis­tribut­ing vi­tal funds, and any at­tempted power grab is likely to raise eye­brows within the in­dus­try.

Mean­while, lenders to small and medium-sized com­pa­nies are grow­ing in­creas­ingly con­cerned that firms could col­lapse un­der the weight of the debt moun­tain taken on to sur­vive Covid-19.

Caro­line Stock­mann of the As­so­ci­a­tion of Cor­po­rate Trea­sur­ers said some of her mem­bers had warned of a “very ugly” sec­ond half of 2020. She said: “If large num­bers of businesses are strug­gling and they don’t get any help, the econ­omy is go­ing to go into a worse and worse spi­ral.”

Ms Stock­mann warned that mass de­faults could mean banks them­selves started to get into trou­ble.

She called for longer loan terms, but added that a so­lu­tion was needed to pro­tect banks too.

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