Small dealers secure after Wall Street turmoil

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Small dealers secure after Wall Street turmoil

Microscope contributor

The message to resellers concerned about the liquidity of business banking facilities after the collapse of Lehman Brothers and today’s rescue of Merrill Lynch, is not to panic.

In a statement made to the BBC, Angela Knight, chief executive of the British Bankers Association (BBA), said that Lehman Brothers was a small player in the UK and British banks had largely recapitalised in the wake of last year’s Northern Rock failure.

Knight said the BBA knew of no British banks in a similar situation.

Last week, the association released figures showing that lending to UK SMEs was actually up over the 12 months to June 2008, adding to business confidence.

Based on a survey of banks including Barclays, HSBC and RBOS, the BBA revealed that term lending grew 11% to £44bn, while total deposits were up 6% to £54.5bn. Over the course of the year, 543,000 new SME banking relationships were established.

“These figures reflect the economic climate for the small business sector, with borrowing continuing to expand, but deposit growth slowing,” said BBA statistics director David Dooks.

“In the face of weaker trading conditions, businesses are using all the cash they can generate, while those seeking finance are generally taking fixed-rate structured loans or using previously agreed facilities,” he added.

Meanwhile, technology stocks were among those that took a battering on Monday after Lehman Brothers announced it was filing for Chapter11 on Sunday night, although no publicly-listed tech firms have issued any statements on the crisis as yet.


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