Small firms ‘wary of taking on debt’, says Ulster Bank’s Howard
CEO says her bank has sought simplification of SME support, writes Fearghal O’Connor
ULSTER Bank has asked for changes to simplify a key Covid-19 business loan scheme — but its chief executive defended the way banks have administered government support schemes.
Businesses and representative bodies have been critical of the lack of lending to small firms impacted by the pandemic. They have hit out at what they have claimed are long processing times for applications and complicated procedures. Some businesses have claimed banks are unwilling to lend to smaller firms.
“Look, I’ve read that criticism myself,” Ulster Bank chief executive Jane Howard told the Sunday Independent. “In terms of our commercial customers, it’s not just the Covid issue. In recent years, there hasn’t necessarily been the demand for lending that people might have expected, particularly in the SME market. We put a €500m working capital support in place and some people have availed of it, but not everybody. And when you listen to some customers, I think the effects of the last crisis are still absolutely at the front of people’s conscience and therefore they’re quite thoughtful about the need to borrow.”
On Friday, Ulster Bank reported an operating loss of €276m for the six months to the end of June, compared with an operating profit of €26m the same time last year. This was largely due to a €278m net impairment charge against a potential surge in loan losses.
But Howard expressed confidence in the schemes put in place by the Government to help firms through the pandemic, which are being administered through the banks.
“The supports are in place, there are grants, there are working capital supports and we’ve now got the small firms loan guarantee scheme in place. And, of course, the supports to help people individually with the wage subsidies and help businesses as well,” she said.
“So I think the supports are in place. The challenge is going to be as businesses open up, what support and what draw-downs do they make.”
The bank had, however, requested that a key scheme be made simpler, she said. “I think you can always make things easier. But there’s a balance here. So it’s important the banks are responsible lenders. And it’s important they get the information to be able to support customers in the right way.
“We have said, in terms of the small firms loan guarantee scheme, could we try to minimise the bureaucracy and make it straightforward and shorter, and I know that is being looked at,” she said.