Refinance spike puts pressure on lending system

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Businesses and their bankers are facing new challenges as opportunities for expansion and the need for refinancing meet head to head with new international regulations on liquidity and lending.

Arguably, there has never been a greater need for both sides of the borrowing and lending equation to understand the pressures they face and come up with smart solutions that make the most of the money that is available.

It is against that background that Barclays Corporate and The Star have joined forces to stage the latest Star Business Round Table.

“There is a lot of talk about businesses and banks facing a ‘refinance spike’ next year, when there will be real pressure on finance availability in the system,” says Chris Forrest, Sheffield-based head of Barclays Corporate in Yorkshire and Humber.

“This spike is due to a combination of the large number of businesses with loans maturing in 2012, as well as international regulations that are forcing banks to hold more capital, particularly against higher risk and longer-term forms of lending, which is also pushing up the cost of those products.

“Banks need to explain that to their customers and to ensure they have an understanding of their customers’ needs so that they can offer them the right options to meet those needs at the least cost for both parties.

“We hope that by teaming up with The Star to stage this Round Table we can learn more about businesses’ aspirations and growth plans and they can, in turn, learn why it may benefit them to look at different ways of funding those plans that may be cheaper because they require us to hold less capital.”

Edited highlights of the round table discussion, chaired by Star Industrial Editor Bob Rae, will appear in The Star’s Business Monthly magazine and as a video and text on The Star’s website:

Bob Rae said: “We are delighted to be joining forces with Barclays Corporate to stage this crucial discussion.

“Banks have faced a lot of criticism since the credit crunch. Their response is that they remain open for business, but there is little doubt that new international regulations mean the vehicles for lending will change.

“Businesses have shown themselves to be ready for change when it comes to developing and investing in new techniques to remain globally competitive. They now need to be equally adaptable about how they fund future developments.

“Barclays Corporate deserves praise for being willing to stick its head above the parapet, explain how the world of corporate lending is changing and how business can make the most of those changes.”

The Round Table discussion will involve around a dozen leading local business people and takes place at lunchtime on May 26, at Barclays Corporate’s offices in St Paul’s Place, Sheffield.