To sustain or grow business, owners need to continually invest; However, 2013 has maintained a vein of general turbulence for business… with a finale to the year (unless something else turns up before Big Ben’s midnight striking in the New Year….) on the heels of the Co-Op’s disgraced former Chairman’s scandal, culminating in RBS being accused of deliberately wrecking viable small businesses to make profit.
My concern has always been for those businesses that were indulged by their banks, like spoilt children at a party; overeating and over-excited to the point of bursting. Then, needing support, (often feeling sick) they’d return to the bank for assistance – Only to find themselves overlooked and thrown out of the ‘house’. Good viable businesses and so-called zombie business equally hit – Any who have spoken with me over the last decade will know that the RBS story is very old news. And now, earlier than the 2018 target, the Bank of England has been asked to review its powers over the banks’ balance sheets – the Leverage Ratio – to rein in risk-taking banks.
With access to finance via traditional bank funding still having barriers, businesses have done well to keep their heads above water. So will the 2014 opening of The British Business Bank offer some innovation as an institution? Or will dependence on its infrastructure Velcro it to the various other Government initiatives which have had little impact in their contribution to accessing working capital or asset purchase?
2014 will be interesting to watch as a juncture to continued ‘extreme’ risk aversion. The Banking Reform Bill (in the House of Lords) with its measurements to ‘improve’ bank governance is to come into effect. One element proposed to enter the Bill is the criminal offence of ‘reckless misconduct in the management of a bank’ (should a senior banker’s behaviour fall below that which could be ‘reasonably expected’). That could be an interesting one – We all run our businesses in the belief that we’re doing the right thing at the time (to run our businesses) and, banks being businesses will probably counter the same argument. Which, considering the few spot-the-differences in the 5+ years since the financial carnage, there’s probably plenty of time for those at high levels to haul this one around before any movement is seen in the management culture of those lofty level bankers.
Analysis Paralysis 2014?
Image and Article credit: Copyright SUF © 2013