SME lending may increase, but banks in Scotland still reluctant to hire
The need to lend more to small and medium enterprises (SMEs) north of the border has long-been a hot potato.
But with the government potentially set to influence this through its stakes in RBS and Lloyds, there's a chance that these banks could loosen their purse strings, and there may be a need to bolster SME lending teams in Scotland.
Prime minister David Cameron told the CBI annual conference yesterday that he wants a banking sector that is "really focused on SME lending". To do this, the government may leverage its influence over RBS and Lloyds.
Clearly, there's a need to increase lending. According to figures from The Committee of Scottish Clearing Bankers, the four biggest banks north of the border have extended loans to just over 4,000 companies in Q2, which is over 300 less than at the same point in 2009.
On the recruitment front, earlier this month Lloyds Banking Group unveiled three senior appointments to serve the SME sector, while other banks added to their commercial divisions in Scotland early in 2010.
So far, though, there's little indication of a general increase in appetite to hire.
"The indicators are that SME lending in Scotland is improving," says Dougie Adams, senior economic advisor to the Ernst & Young Scottish ITEM Club. "But I would think there's little need to hire beyond the senior ranks, as most banks are well-staffed in this area."
While Scotland's two largest banks haven't been shy about making redundancies over the last year, there's also been a great deal of internal transferral. This makes external hiring for these roles currently unnecessary, suggest recruiters.
"The internal reshuffling, combined with the fall out from the corporate banking space, means that there's been little appetite to recruit externally," says Richard Park, country manager for Martin Ward Anderson in Scotland.
Even if SME lending does take off, it's simply a case of transferring people back into customer facing roles, suggests Mike Leeman, manager, finance recruitment at Bright Purple in Edinburgh.
"Despite the redundancy announcements, commercial banking teams haven't been hugely depleted, with many bankers now focusing on working out big corporate accounts," he says. "With the pent up demand for affordable loans from SMEs, it's going to be less about recruiting bankers with a little black book and more about simply being part of a team offering credit to win new business."
