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Official Report (Hansard)

Session: 2008/2009

Date: 10 June 2009

NORTHERN IRELAND ASSEMBLY 
COMMITTEE FOR 
FINANCE AND PERSONNEL

Survey on Northern Ireland Businesses Accessing Finances from Local Banks

10 June 2009

 

Members present for all or part of the proceedings:

Mr Mitchel McLaughlin (Chairperson)
Mr Simon Hamilton (Deputy Chairperson) 
Mr Fra McCann 
Ms Jennifer McCann 
Mr Adrian McQuillan 
Mr Declan O’Loan 
Mr Ian Paisley Jnr 
Ms Dawn Purvis

Witnesses:

Linda Brown
Michael Murray ) Institute of Directors
Joanne Stuart

The Chairperson of the Committee for Finance and Personnel (Mr McLaughlin):

The next item on the agenda is the survey on businesses accessing finances from local banks. I welcome the officials from the Institute of Directors (IoD): Linda Brown, divisional director; Michael Murray, chairman of the economic strategy division; and Joanne Stuart, chairperson. I invite you to give us some opening comments before we open the floor for discussion.

Ms Stuart:

Thank you very much. To give the Committee some background, the Institute of Directors has approximately 1,000 members in Northern Ireland. Membership is on an individual basis, and members are senior executives in their particular companies and organisations. We have a good split across all industries, including the public sector.

We are here today on the back of the bank lending survey; the results of which we sent to the Committee. The background to the survey is that we were getting feedback from our members that conditions with the banks were difficult. Companies were finding it difficult to access to finance. We started meeting the banks in January 2009 to try to understand the problems. It became apparent that we needed to quantify the extent of the problem, so we decided to do a survey. We put the questions together, and the survey went out in the first two weeks of April. Members have a copy of the findings from it.

When we analysed where the respondents were from, we had good coverage by size and industry, which is the main point for us. Respondents were not all from the construction industry or very small organisations. The findings show that 53% of respondents indicated that conditions had worsened since the beginning of the year; that compares with a national figure of 43%, found when the IoD ran the same survey across the UK.

Of the organisations that responded, 50% indicated that interest rates, arrangement fees and costs had increased. Short-term funding around facilities such as overdrafts seemed to be a particular challenge, although companies were able to renew facilities — both loans and overdrafts — and access new loans. However, there seemed to be an issue around emergency funding.

The majority of respondents were not aware of the Government-backed enterprise finance guarantee scheme, nor were banks talking to them about it. The good thing was that 60% of respondents said that lack of finance was not stopping them from going ahead with projects, which was a positive finding.

In May, we had our annual survey of members. Of the respondents to that, some 61% identified that the availability of business finance should be a high priority for IoD lobbying, and 44% consider that the most important priority for the Executive is to influence banks to provide short-term liquidity to SMEs. This is an issue that affects small businesses and our other members.

Since we published the findings of the survey, we met all five banks, including HSBC, which came out as the fifth bank in the findings. We also have a meeting with the British Banking Association planned, and that is happening in the next couple of weeks. None of the banks expressed any surprise at the findings, and all insist that they are open for business and that finance is available for good business cases. The banks have done a lot of work on the enterprise finance guarantee scheme, and they assure us that they are starting to position that with customers. There seems to be more awareness of, and readiness to use, that facility. The only bank that was able to give concrete examples of having used the enterprise finance guarantee scheme was the Ulster Bank, which also had examples of using the SME regional fund that was announced recently.

The interesting thing for us is that all the banks state that their business banking has increased over the last 12 months. However, it is not clear to us whether that really is new business. We are not sure whether it is because interest rates, arrangement fees and costs have increased and their income has, therefore, increased, or if it is down to the refinancing of existing business. It is difficult to get a clear picture of where business is increasing, as the banks claim it has done.

In those meetings, we talked about skills within the banks. As they move from dealing with property deals to much more complex financing requirements, each bank is rolling out training programmes. The banks are also facing conflicting priorities. The Financial Services Authority (FSA) insists that the balance between borrowing and lending has to be maintained, so banks have to either increase borrowing or reduce lending, yet the Government are pushing for the banks to increase lending. The banks are pulled and pushed in different ways and there is a conflict in that respect.

Some of the actions that resulted from the meetings and the survey include the MATRIX report released by the Department of Enterprise, Trade and Investment (DETI), which explains all the Government-backed schemes. That is a very good document that we have sent to our members, and I know that other business organisations have done the same.

We need to make people aware of what the alternative forms of financing are. We will rerun the survey in August. We now have a baseline from which to work, so we can see whether things are getting better or whether other issues are emerging.

One of the other things that came out of that work is that, over the last five to 10 years, the business banking sector in Northern Ireland has been very competitive. Organisations have not had to look anywhere else for finance; banks were available and they had money. Therefore, there was low take-up of venture capital funding and equity-type funding. We need to raise awareness of the alternative financing options for businesses. Banks are not the only place from which firms can get money. Although we will continue to meet the banks regularly, we also have work to do on changing the mindset in businesses.

Action has been taken on the training of staff from SMEs and professional advisers on business case development and also on the training of client managers in banks. We plan to meet Alastair Hamilton of Invest NI at the beginning of July to discuss some of those issues. I hope that that adds to the information that I sent to the Committee.

The Chairperson:

Did you say that there is a very competitive environment between banks?

Ms Stuart:

Over the past five to 10 years, the business banking sector was very competitive, and it was easy for organisations to get finance from banks. They did not have to look at alternative forms of financing because banks were fighting for their business. However, banks are now being more prudent.

The Chairperson:

That is what I am getting at. Did you find that only 27% of companies are considering switching banks?

Ms Stuart:

Yes, we did.

Mr Michael Murray ( Institute of Directors):

In our next survey, we will ask how many people have switched banks since the start of the year. There is a feeling that the cost of finance from banks in Northern Ireland was particularly low previously. Many people were operating on base rate plus, but we have seen a big increase in the number of people who are now going to the plus rate of the London interbank offered rate (LIBOR). Having spoken to the banks, we see that trend continuing and we do not see the very low cost of financing coming back any time soon.

The Chairperson:

That statistic might, therefore, begin to change as conditions change.

Mr Murray:

It might start pushing businesses to look at venture capitalists and at offering equity stakes in their companies, rather than the ownership of businesses always passing from one family member to another. Companies will start to look at other methods of equity financing. In fact, two weeks ago, we ran a presentation with a venture capitalist company to try to expose more people to that method of financing.

Ms Linda Brown ( Institute of Directors):

One of the banks told us that they were querying whether companies had been completely turned down when they made an application. In some cases, banks had told companies that they could not give them all the money, but they could give them some of it. That begs the question: where do people go for the rest of the money? That issue relates to the need to look at more complex funding solutions.

The Chairperson:

It is, obviously, a changing scenario.

Ms Stuart:

It means that the amount of business that banks have turned down is not as high as one would expect because they are still accepting business, but they are not giving as much of the finance that is being asked for.

Ms Purvis:

I wanted to ask about alternative finance options. I was struck by the amount of respondents to the survey who said that they had turned to using their personal money or money borrowed from relatives, for example. I was also struck by the fact that they did not list any alternative finance options.

Mr Murray:

There is an opportunity in that respect. As we have said, it is not just SMEs that need training and support. The issue is all about how businesses can be developed and how we can change the large number of small businesses that we have into medium-sized enterprises. There is a wide-ranging training requirement for SMEs, professional advisers — that is, the people who advise the companies — and bank staff.

Banks will accept that the vast majority of their lending was on property and while property prices were rising, it was an easy formula. However, it is much more complex for banks to decide whether it is a good investment to fund companies whose free cash flow is reducing. There is a role for an organisation to intervene, whether that is Invest Northern Ireland or DETI. It is important to look to a much wider client base than that of Invest NI and get out to the SMEs, professional bodies and banks.

Ms Purvis:

I want to thank you, because a lot of the anecdotal evidence that we have received has been confirmed by the survey. It is important that such a survey is done regularly. Did you find any difference in the effect of bank lending across the different sectors? I ask that because I have received anecdotal evidence that the financial services, personal services and retail sectors are being hit more heavily than other sectors.

Mr Murray:

We asked those respondents who had been refused finance to specify whether that finance was for business development or construction or whether it was for general trading purposes. The results of the survey show that the vast majority said that it was for trading. The institute needs to get below that data so that we can understand what the respondents actually meant by the term “trading”, and the survey needs to be developed to do that.

Before we carried out the survey, we assumed that business development or construction was going to be the number one reason for the refusal of finance, but that certainly did not come out in the results. The survey, in which most sectors were well represented, showed that there was no material difference in bank lending between the different sectors.

Ms Stuart:

Businesses are not contacting the banks quickly enough, and banks are asking for more information as to why those organisations did not ask for assistance earlier. That is particularly relevant to the provision of short-term funding. For example, it was easier to secure the extension of an overdraft in the past, but there is now much more pushback and questioning from the banks. We need to carry out some training with the SMEs to make them aware of what they need to do to get support and the type of information that will be required.

Ms L Brown:

We also need to understand why those businesses got into that situation in the first place. For example, are they having problems getting payments from other people? Do their credit-control procedures need to be examined? It is important to know the reasons for their sudden need for overdraft extensions.

Mr Murray:

Anecdotally, we had heard that businesses were unable to renew their overdraft facilities. Therefore, we were quite surprised when the vast majority of the respondents to the survey said that they could renew those facilities. The issue of renewal was not the problem, it was the issue of obtaining new overdrafts. From the bank’s point of view, it is understandable that the creation of new facilities is difficult, and why a panic call from a business customer on a Friday advising their bank that they cannot pay their employees’ wages is unlikely to receive a positive response. That is why more education is required to help businesses to anticipate such situations earlier.

Ms Purvis:

The anecdotal evidence that I have received from smaller businesses is not that the finance was not available, but that the charges for that finance had increased so much that it was scary. Therefore, those businesses had to pay people off, or delve into their own reserves, just to keep the business trading, as opposed to using that finance to develop their business.

Mr Murray:

Again, that is borne out by the survey. The vast majority of respondents said that the cost of finance has risen.

Ms Stuart:

That is something that we do not see changing.

Ms Purvis:

The survey that you have conducted is great as it has come on the back of the MATRIX report and it has helped to build awareness of the issues facing the business community here. The Committee has asked questions about the enterprise finance guarantee scheme, which replaced the small firms loans guarantee scheme. Anecdotal evidence suggests that the new scheme is more complicated and that there does not seem to be as much take-up of it. Has the IoD picked up on anything relating to that new scheme?

Ms Stuart:

Another surprising finding from the survey was that companies were not aware of that scheme and that the banks were not discussing it as an option. I am sure that the banks have given the Committee evidence on the difficulties that they have had with the enterprise finance guarantee scheme from a portfolio perspective. However, on the basis of the meetings that we had with the banks after the survey, as compared with those that we had at the beginning of 2009, we are getting a stronger indication that they are ready to use that scheme.

The Ulster Bank was the only bank that was able to provide the IoD with concrete examples of its use of that scheme. I am aware that representatives of that bank are appearing before Committee next week, and they might provide you with more detail on that. However, the Ulster Bank also told us that, of the businesses that had been accepted on that scheme, not all of them had drawn down the funds. It is one thing for a business to be accepted on the scheme, but another for the business to be ready to draw down the money. However, as I said, we now feel much more positive about the banks being ready to use the scheme.

The question is: when is the enterprise finance guarantee scheme more appropriate than the bank providing funding? Given the rules surrounding that scheme, if a bank were not necessarily going to give money to a company based on its business case, that company would probably not get the money through the enterprise finance guarantee scheme. There is still some work to be done to see how appropriate the scheme will be.

The short-term aid scheme that DETI announced was a real step forward. However, we question whether enough organisations will fall within its eligibility criteria. Nevertheless, it is a first step. We will be monitoring how many organisations go forward with that scheme. Arlene Foster said that the complexity of the application process will be kept to a minimum and decisions will be made within 20 days. If that pans out, it will be a good step forward.

Mr Murray:

It is only now that the banks are ready to use the enterprise finance guarantee scheme. The PR for that scheme ran well in advance of its implementation.

Mr McQuillan:

Have you come across any businesses that have had their loans recalled and refinanced and have been charged a large sum of money for the refinancing of loans that were not due to be recalled for, perhaps, five years?

Mr Murray:

Only a small number of businesses told us that they had had loans unilaterally withdrawn by their banks, and we did not get into the specifics of what happened. Only a very small percentage of companies has been affected in that way.

Mr McQuillan:

A few people have contacted me about that, and I do not know whether it is happening with one bank only or whether it is widespread.

Mr Murray:

All the banks are saying that they are open for business and that if good business cases are there, they are not withdrawing finance or repricing their finances in such cases. The banks are repricing their finance as regards changing the interest rates, but we have not come across any examples of such draconian practice.

Ms J McCann:

I apologise for missing the beginning of your presentation. I want to follow up on a question that Dawn Purvis asked about some of the schemes. The paper from the IoD referred to a lack of awareness of the schemes available, and you have said that the banks are only implementing them now. You explained about the blockage in the implementation of those schemes in your previous answer.

You said that Government must make businesses aware of the help that is available to them, and that they must work more closely with the banks to ensure that that cascades down to local businesses. How can that be done? Is Invest NI, for example, the organisation to do that, or should it be a wider initiative? Sometimes Invest NI looks only at its own client base. Therefore, how do you envisage that being done?

Mr Murray:

We are meeting Alastair Hamilton on 8 July, and one of the points that we want to put to him is that, in this crisis, Invest NI has to react quickly and go far beyond its current client base and take in a much wider spectrum. We hope that he will be receptive to that and drive it forward. The other issue is the resources that are available to Invest NI to implement that. However, during such a crisis, one has to move quickly beyond the Invest NI client base. We have seen that happening with some of the credit crunch seminars that Invest NI funded and ran, which were very successful.

Ms Stuart:

I asked the Minister specifically about the short-term assistance scheme, which is not restricted to Invest NI clients. We met the Invest NI executive management team last week, and that matter was discussed. We talked about how we communicate that on a wider basis than the Invest NI client base. Given the current situation, Alastair Hamilton is supportive of that approach. However, we all have a responsibility to get that message across. We are doing that with our members by, for example, providing information on our website, and other business organisations are also doing it. The MATRIX report from DETI, which Dawn Purvis referred to, is excellent. It is an easy-to-read document that helps to point businesses in the right direction.

We have to continue to get that message out. Unfortunately, that sort of information goes over people’s heads until they need it. We have to ensure that that information is always available.

Ms J McCann:

Are you happy that those initiatives are now in the public domain and that the banks have that information and can pass it on to their customers? Some constituents of mine went to their bank to ask about that particular scheme but were told that the bank knew nothing about it. My constituents had heard about the scheme on television news reports. Are you content that that blockage has now been cleared and that the banks are being proactive and telling their business customers that they can avail themselves of those schemes?

Ms Stuart:

In the meetings that we had with the banks at the beginning of the year and in the past few weeks we learnt that the banks have provided a lot of training for their client managers so that they understand of the various options. As Michael Murray said, it has taken the banks a bit of time to work out the mechanics of the scheme. There is still doubt as to whether it will solve all problems; it is a question of when it will be appropriate to operate it. However, I came out of those meetings with the banks more confident that the scheme is being discussed with clients and that they are looking for opportunities to use it. The Ulster Bank is the only bank that can give examples of when it has put the scheme forward and it has been accepted.Mr Murray:

People must recognise that the enterprise finance guarantee scheme will not cure all ills. Some £25 million is available for the whole of Northern Ireland. That is a fairly small amount compared with the financing base of companies, so it is not going to cure all problems. Twenty-five million pounds is a lot of money, but it is a small amount compared with what is required. Equally, banks are still not going to accept weak business cases just because they are submitted under the guarantee scheme. The business cases must still stack up.

Ms Stuart:

We agree with that. The scheme is not about bailing out companies that are not viable businesses.

Ms J McCann:

You have answered my final question. I was going to ask whether you feel that the Government is doing enough about the recession. Are they producing enough initiatives to sustain and maintain employment and to help businesses to develop and grow?

Mr Murray:

For me, it is all about implementation now. One of the things that we suggested to the First Minister and the deputy First Minister when we met them was that they should bring together a small group of top civil servants and top private-sector people to get into the nitty-gritty of the implementation of some of those schemes. We have enough initiatives. The Economic Development Forum (EDF) presented 50-odd initiatives. Let us get into implementation.

The Chairperson:

Yes, and delivery.

Mr Murray:

Private sector businesses are prepared to allow a small number of their top people to assist with implementation.

The Chairperson:

Have you had a response to that suggestion?

Mr Murray:

It was an idea that was taken away from the meeting. Nothing has been implemented yet. The one big caveat is that the group will not be a 25-person team. It will be a small, focused team that can really get into the problem.

The Chairperson:

Who did you make that proposition to?

Mr Murray:

It was made at the meeting with the First Minister and the deputy First Minister.

Ms Stuart:

The priority actions on the economy came out of the meetings of the Economic Development Forum. Those have been circulated to all Departments so that we can see what is happening there. We are moving forward, and we will have another meeting with the EDF on 18 June, at which we will receive another update. Things are starting to move in particular areas, and we welcome Sammy Wilson’s statement with regard to taking economic benefits into consideration in the planning process. Decisions on elements of economy proofing are also important to us. We have identified the economy as the number one priority, and the initiatives that will be implemented will allow us to determine whether money that is being spent is being leveraged to the maximum degree to meet the stated objectives.

Mr O’Loan:

I commend you for establishing an evidence base and making it more sophisticated and analytical. Banking is a dynamic environment, and it is important not to draw conclusions from how things were even three months ago. Did you find much variation in customer satisfaction across the banks? In particular, is there a wide variation between banks whose parent companies are GB-based and those that are RoI-based?

Ms Stuart:

We split the results according to each bank. There were differences between them, and we shared with individual banks the results from their own customers. With regard to regional banks, there seems to be much more transparency with Ulster Bank, especially as it has the regional fund identified for Northern Ireland, and that made it possible to get more evidence of its business.

Mr Murray:

It is interesting that you spoke about satisfaction. We did not ask people whether they were satisfied with their bank. We will try to measure that in the next survey by asking whether people have switched banks to see whether there has been a movement away from one bank or another. There was no material difference between the four main banks when people were asked whether they were thinking about moving banks. That is as close as we got to measuring satisfaction.

Mr O’Loan:

I recently came across a case of a bank re-profiling debt and then charging the customer a great deal of money for it. However, the customer was not of a mind to challenge that, because there is a feeling that the banks can get one in the long grass. One might win a short-term battle, but lose in the long-term. Is that more than an anecdote? That example certainly says a lot about the quality of the relationship between customer and bank.

Ms Stuart:

I have heard anecdotal comments from organisations about their relationships with the banks. Part of banks’ training is about developing relationships again, because that can involve complex discussions. It is a question of banks getting a better understanding of businesses. However, the information that I have is anecdotal.

Mr O’Loan:

I want to ask about initiatives that banks are undertaking. It is interesting that Ulster Bank is cropping up in your examples as well as in anecdotes that I hear. They are more than anecdotes, however. I am thinking, for example, of the significant amount of money that Ulster Bank put into debt advice. I do not think that any other finance house has replicated that.

I also heard recently that when working with property developers who were in financial difficulties the bank was very proactive in, for example, re-profiling planning approvals to make them more commercially viable. It was Ulster Bank that was taking the lead in that. If other banks can come up with such anecdotes, good luck to them. Do you know of other original initiatives?

Ms Stuart:

During the meetings with the banks, apart from Ulster Bank, they did not give us that sort of information. I am not aware of banks running such initiatives. Ulster Bank seemed to be more forthcoming in sharing information.

The Chairperson:

Will the ongoing survey seek customers’ views about whether the banks are retrenching with regard to services? I have seen evidence of that.

Mr Murray:

I have just written that down as a question that needs to be answered: are banks cancelling loans and charging high amounts to refinance? If the Committee is raising that issue, we can include that in the next survey. That is not an issue that we picked up.

The Chairperson:

I do not represent Derry, but I live in Derry. Ulster Bank had a very good unit there that promoted and mentored businesses in the north-west. Ulster Bank decided, even though that was a profitable exercise, to take that unit back into Belfast. That has caused some alarm. I would be surprised if a few members in Derry did not reflect that.

Ms Stuart:

I think that we will look at those questions as we meet the banks and the Committee. We want to have a balance: we still want to compare apples with apples, but other issues have emerged that would be good to be able to —

The Chairperson:

At present, enterprises are looking for as much support and as tight a working relationship with their banks as is possible. That relates to why people are so dependent on, or faithful to, their banks. There does not seem to be the same willingness to switch banks. Pulling back local services might damage what had previously been a fairly sound business relationship.

Mr Murray:

That is what we are talking about in regard to training pieces of the industry and bringing together SMEs, professional advisors and the banks. If we can get some kind of sharing of best practice — how to look at a business case; how to develop a business; how to keep local relationships — among the banks and the professional services and the —

The Chairperson:

That should also include the political system in order to encourage best practice.

Ms Stuart:

Regarding the initiatives, for example, the Northern Bank is holding workshops and seminars where they meet people to talk about different areas of finance. Some banks are doing that. They are trying to get out there to get the message across.

Mr Paisley Jnr:

I commend you for this report. It is an excellent piece of work and will be very useful next week, when the banks and lenders will appear before the Committee again. I will be very blunt: from your work, do you think that the banks care?

Mr Murray:

Yes, I genuinely think so. Having met the chief executives of the banks, I think that they care and that they understand that their business is so interrelated to general business that they cannot survive without general business prospering, or rather they will survive, but they certainly will not prosper without general business prospering.

Mr Paisley Jnr:

In many instances, banks are on the verge of being able to claim vast assets and tracts of land in Northern Ireland alone. They will be around another day and will be able to sell those assets another day, and they will do very well, thank you. The impression that I get from a lot of businesses is that they are coming under immense pressure; they are almost just telling the banks to go ahead and take what they want.

Mr Murray:

There are two reasons why I do not think that that will happen. First, banks have to improve their balance sheets. It is better for their balance sheets if they can keep that loan on their balance sheets, rather than hold a piece of land that is worth only half of what the original loan was worth. In maintaining their balance sheets, it is in their interest to keep that business and that piece of land at the value of the loan, rather than at its true current value.

Secondly, there is no doubt that banks will to try to improve their gross margin. They will try to improve their profitability, and, therefore, they will put prices up.

Mr Paisley Jnr:

I am sure that you have seen, and such anecdotes have been put to me, that the banks are unilaterally changing rates. That causes stress for the market and for the individual who is trying to run a business. They do not have working capital, and, at the same time, they are being told unilaterally that they must honour their contract; they must find the money or lose the business. The duress that many business people are under would do your head in. There are many examples in my constituency of multimillion-pound businesses being held to ransom for a few hundred thousand pounds.

Ms Stuart:

Some of the regional banks — the ones that are struggling — have had people come in from head office to go through all of their business. Things have to change. That scrutiny has put a lot of pressure on regional banks. The banks’ conflict between having to improve their balance sheets and their loan:debt ratios and responding to people who demand that they lend creates a lot of pressure to reduce that ratio. That means that the banks’ business is more concerned with refinancing. Increasing interest rates and charges enables them to show that they are increasing their business.

Mr Paisley Jnr:

How does that stack up against the new-found Government philosophy that, if we cannot cut our way out of this crisis, we must spend our way out?

Mr Murray:

There is cut and thrust. The Bank of England stated yesterday that increased lending on the part of the banks is the only way to get us out of the recession. However, the FSA proposes that borrowings and loan capabilities must match. Therefore, banks will be unable to leverage additional funding on the international markets. That is tantamount to saying that a bank that has receipts of £1 can only lend £1, and that will remove about one third of current lending and further worsen the banks’ problem.

The FSA did not see many problems on the way up, when everything was booming; therefore, we must be careful not to swing the pendulum so far the other way that we arrive at the proposition that banks cannot lend because doing so would break their balance-sheet rules.

Ms Stuart:

That is one of the reasons why the money that the Bank of England put into quantitative easing, which I do not fully understand, enables banks to free up some of their loans and to increase liquidity. However, the Committee must push the FSA on how that ties up with moving the economy forward.

Mr Paisley Jnr:

Everything that you have said confirms my suspicion that the banks are not as benign as they appear. Ultimately, they can take the long-term view that they will hold assets that will grow in future, as opposed to getting businesses and people out of trouble.

Mr Murray:

Banks will state openly that they are absolutely going to improve their balance sheets. I also think that they will be relatively open about increasing their gross margin and stepping up their costs to people. They are doing those things. I simply do not believe that it is in the banks’ interest to foreclose on loans.

Mr Paisley Jnr:

Why do 27% of the people that you surveyed want to switch their bank accounts? Does that not tell a story?

Mr Murray:

It does.

The Chairperson:

One could jump to a conclusion.

Mr Murray:

The banks are quite open about the present dissatisfaction with them. In August, we will ask people whether they have changed their bank. It will be interesting to see whether people have carried through on that.

Ms Stuart:

The institute considered whether any Government schemes should operate through the banks or whether another option for dealing with them should be considered for businesses. I suppose that Invest NI’s short-term assistance scheme is one method that takes control away from the banks and helps to balance out potential conflicts.

As Michael stated earlier, the survey highlighted difficulties and challenges but did not find that big, unilateral decisions were being made. It found that people were able to renew their finance, albeit at a higher cost. Not everyone was failing to get new loans. That is an issue that we must continue to monitor.

Mr Paisley Jnr:

Thank you.

The Chairperson:

The institute will use the survey in its engagement with the banks. Has that follow-up engagement taken place?

Ms Stuart:

Yes, it has. All of the banks have received the overall results and their individual results and we have met all of them except for the British Bankers’ Association, which the institute will meet in the next couple of weeks. That will be our first meeting with that association.

The Chairperson:

Good luck.

Mr Paisley Jnr:

Lucky boys.

Ms Stuart:

All of the banks have taken the survey on board.

The Chairperson:

The Hansard report of the Committee’s engagement with the British Bankers’ Association is available to read online. [Laughter.]

Mr Murray:

I am really looking forward to it now.

Ms Stuart:

The banks were also aware that the institute was today giving evidence to the Committee, which I know will see the banks next week.

The Chairperson:

From your experience and the survey, what are the key issues that should be addressed in the Committee’s upcoming engagement with the banks?

Ms Purvis:

The issue of charges should be addressed.

Ms Stuart:

Yes, that is a difficult issue. The banks need to communicate better with their customers. The banks could say much more to help people to understand the situation and to show them what they need. Declan O’Loan mentioned some of the initiatives, and those could be put in place across all of the banks so that they work with their customers to improve their business cases, to look at their debt advice and to become slightly more proactive. Training and skills could also be looked at.

Mr Murray:

The two most important issues are training and openness. Training should be aimed at achieving best practice. Openness should show what is really going on and what the banks require from businesses in order to fund them.

The Chairperson:

Joanne, Linda and Michael, that was very useful. We look forward to getting regular updates from the survey. The survey provides an evidence base for all of us. Part of our difficulty in our first bite at this inquiry was that we felt that the evidence from our constituencies flatly contradicted what the banks assured us was the reality. As Dawn acknowledged, the evidence from your survey validates the concerns that members expressed at that time.

Mr Murray:

The good thing is that the banks accept the legitimacy of the survey.

The Chairperson:

Yes, and perhaps we are getting a tighter and more realistic focus on what is going on. You are particularly objective about what the banks intend to do to manage their way through and their interest in the process. Let us not encourage them to do too much collateral damage while they are at it.

Mr Murray:

They cannot afford it.

The Chairperson:

Well done, and thank you.

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