UK Banks increase business’ cost of borrowing

Banks are continuing to significantly  increase margins. The Bank of England reported yesterday that the effective interest rate on all new or refinanced corporate lending has risen from 2 per cent in August to 2.4 per cent in November, even though three-month Libor has eased lower.

This trend affects smaller and medium-sized enterprises particularly strongly as buoyant capital markets can still meet the needs of larger business.

Commenting, Stephen Whitlam of Expense Reduction Analysts Banking Team said “Local bank managers are acutely aware of the cost of funds, and the need for their own business to make a return and repair balance sheets; so this trend will continue.”

I am pleased to report though that Expense Reduction Analysts Banking team  remain able to identify and secure valuable bank service charge savings for clients. Key success areas are Merchant Card Fees, Cash Processing and Secure Cash Handling. Lets not fool ourselves – the days of low lending margins are behind us for the foreseeable future, added to which, base rate will also rise as economic recovery takes hold. But effective bank relationship managers will have also embedded other services into our clients ……other services that are deliberately difficult to price reference from a competitive perspective, unless they have access to market information such as that we can provide.