The Banks are still broken, but not financially
David Boyd, Managing Director, PAD4U Estate and Letting Agents Manchester writes:
The banks have been busily rebuilding their balance sheets, more precisely their capital ratios i.e., their savings/loan ratios and having plenty of liquidity (cash) available to cope with the difficulties in the global economy.
This has been achieved by a range of measures including Government backing, quantative easing, improving margins (read charging us more). However, whilst the banks have been repairing their balance sheets with gusto, there seems to be little progress in the processes that to some extent caused the difficulties they find themselves in.
The shock has greatly affected banks capacity to take action, they are still stunned like animals caught in the headlights of an oncoming vehicle. This inaction is having a negative effect on UK economic growth.
Recently I applied for a mortgage from a financial institution that I shall not name. The time it has taken and the sheer number of silly questions that are being put forward is astonishing. For example, after forwarding all of my tenancy agreements, I had the response that many were 'out of date'. Of course the agreements are not out of date, merely the fixed period has expired and now they have become periodic tenancies. However, the underwriter seemingly doesn't understand the concept of periodic tenancies! So now we have the ridiculous situation where I am writing long explanations of tenancy law to the underwriter! This is madness; an underwriter should have a basic understanding of tenancy law, given they are potentially responsible for millions of pounds worth of bank funds.
The above example demonstrates the banks still need to work harder on ensuring the people responsible for making financial decisions have the acumen and the training necessary to carry out their tasks, not just the ability to complete forms. Unless the banks understand that stopping all lending isn't the solution, but rather that they need to lend intelligently which requires human decision making by competent staff, we are doomed to failure... Just of another sort.