Home > Uncategorized > How not to treat a SME. This banker should be fired

How not to treat a SME. This banker should be fired

A very decent independent lender has just taken on the account of a medium size packaging manufacturer turning over around £24m a year. They are well established and profitable

How did they come to win this excellent piece of business from a major bank? The fact is that they should not have done so. The bank should never have lost the business.

The manufacturer had signed with this bank for a facility of around £4m. It has to be said that on both sides there was an error at this point, which should also have been spotted by the broker (if they used one). The business was very seasonal with a lot of work in the pre christmas period. That led to a requirement in excess of £4m.

Yes, that should have been predicted and i would suggest that the bank should certainly have made a provision for this eventuality not least from previous accounts and simply by just knowing the business. They clearly didn’t.

So faced with this requirement what did the bank do? The debt is straight delivery and to safe blue chip clients. The balance sheet is fine. Business was strong

They passed the client onto a “turnaround” specialist. For those that are not aware of this role, their job is to rescue businesses in difficulties

In addition there has been considerable controversy regarding some recent relationships between such specialists and certain bankers. A high profile court case being an example. Far be it for me to suggest that a similar relationship was in place here but maybe someone should have a look?

The independent financier stepped in quickly and grabbed the businesss. They wouldnt have done so unless it was perfectly viable lending.

So what we had was a banker who suggests a “distressed company specialist” to a business that is booming at its peak season.

Thats akin to a doctor diagnosing a broken leg as cancer

Why do these people remain employed?

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