No quick bank recovery, warns Cable
BRITAIN'S banks remain badly damaged and are unlikely to recover quickly, Dr Vince Cable said in Nottingham.
The failure by banks to lend to small and medium-sized firms remained a "massive" problem, said the Business Secretary.
Banks had become "ultra conservative" since their collapse more than four years ago while sector regulators required them to hold more capital, he told the Post.
He said a shortage of equity finance risk capital continued to hold back growth of SMEs.
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"We are trying to get bank lending going with guarantee schemes of various kinds, such as Funding for Lending, using the Government balance sheet to get cheaper funding into companies."
Dr Cable said he was establishing a Business Bank designed to stand behind and support some of the new challenger banks such Handelsbanken. The move is designed to open up competition and opportunities on the banking high street.
"We are trying to support non-bank finance and supply chain finance," Dr Cable added. "But there is a problem and it is not going to go away in a hurry. The banks are badly damaged."
Dr Cable said he received constant complaints about banks. Those who thought they were turned down unreasonably could go to Professor Russell Griggs, supported by consultants Promontory – an arrangement set up by the British Bankers Association.
Dr Cable noted appeals were often successful and banks were not performing the function they should by supporting businesses.
"It is a slow process turning this round," he added.
Dr Cable, who was visiting Nottingham University Business School and BioCity Nottingham, said teaching enterprise was "critically important" to the economy.
"Many ideas come out of universities. The link between universities and business is crucial." he added.
He said PhD graduates in the life science sector often set up their own firms. Their research is fed into industry.
"They have not only to be good scientists but entrepreneurs," added Dr Cable.
But they frequently needed help and advice to become entrepreneurs.
"We are going to have to become an entrepreneurial society," he added.