Santander Intelligence weekly business news update: 14th July

The role of banks in this recovery has continued to be the focus of much debate and it is clear that the changes to capital, liquidity and indeed the risk outlook is much changed from the salad days of 2006/07, but that does not mean that sensible well structured businesses can not secure the support they need. Given some of the more leveraged structures that previously prevailed, there is a need to reset expectations around the respective roles of debt and equity as well as restructure some unsustainable capital structures that are strangling good businesses. However, there is no reason why debt should not flow into well managed businesses, even if their earnings prospects may look more challenging in terms of growth than was historically the case. If the banking industry wants to see a re-alignment of the debt and equity relationship, it has to equally accept a re-alignment of its own expectations in the future, providing that the business is sustainable in terms of meeting its obligations.

Santander is a rapidly growing player in the corporate and commercial market and our lending growth is running at 20% in a contracting market. The portfolio is diverse and full of great businesses, investing and growing, helping to fuel the UK recovery - we feel we are playing our part and certainly intend to carry on doing so.”

Steve Pateman, Head of UK Corporate and Commercial Banking

 

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“It is amazing what a sporting triumph can do for the well being of a nation - Spain's victory at the World Cup has created a feel good factor and sense of national purpose that may well give the economy the kick start that it needs, as the Government pushes through tough economic measures that are critical to developing a broader and more dynamic economy. Time will tell as to whether this momentum can be maintained; sadly,the UK has to find its stimulus outside sport with the England cricket team being the most recent disappointment. However, the record level of business investment seen in Q1 highlights that good progress is now being made despite the significant economic headwinds. And with the budget bringing clarity to the trajectory of the public deficit, it's important that industry, Government and the banking sector do all they can to continue the gentle but sustainable recovery.