If the Government is genuinely interested in improving the service that small- and medium-sized (SME) UK business customers receive from banks, it must address the barriers which deter European banks from entering this market, says the Association of Chartered Certified Accountants (ACCA).
An ACCA research paper reveals that only ten European banks are active in the UK SME lending market and that they deal predominantly with medium-sized companies, which have a typical turnover between Ј5 million and Ј250 million. The 'Big Four' UK clearing banks, in contrast, share 89% of the UK SME market.
The lack of a significant European banking presence in the UK has serious consequences for the SME market. Increased competition from European banks would improve the cost of, and access to, finance for UK businesses, and would also pressurise the UK banks into changing their current approaches to lending and their assessments of loan applications.
