Has what little trust we have in the banks been further eroded?

 
A guest post from Clive Pacey, Commercial finance broker CPCM Finance
This story is somewhat disturbing but would easily be dismissed if we felt that we could trust the banks and their cohorts in various professional services. Unfortunately I believe that that trust has broken down
The accusation is that Allder King worked with Lloyds Bank to “undervalue” various properties held by  certain borrowers who had particularly good low cost pre 2008 deals. The effect of this was to breach the loan covenant and effectively send the business to the wall. True or not? Well Allder King have been cleared by their institute and Lloyds have stated the claims are “baseless” to which one might say,  they would do that and they would say that, wouldn’t they?
I actually believe that this is probably quite a straightforward case to judge and I suspect the detail will be outed soon enough. Undervaluing properties is surely not difficult to pinpoint.
I would also like to believe that this accusation is unfounded and the industry can breath easy. In fact I  wish I could make that assumption and certainly it is no reflection of Lloyds in isolation that I cannot. But the fact is that I feel uneasy
The relationships between many lenders and “professionals” is very unhealthy. There is an often an attitude that businesses are cash cows to rip fees out of regardless of the consequences. There is also too frequently an underlying contempt for businesses and their issues and this is somewhat ironic coming from a sector which is, to put it politely is not held in great esteem
Many business owners are rightly suspicious of the “men in suits” that appear to be  just a little too friendly with each other and give the impression of being “a mafia”, as one client of mine put it. Their concerns are not always unfounded with reciprocal passing around of sometimes unnecessary work not unheard of. During my time, drinks have loosened tongues at various events and I have certainly not been impressed by some of what we I have heard
My view on this is clear. I believe that if bankers have experience of the real world and an understanding of what it takes to commit to an enterprise, then there may just be a little more respect. Certainly if the Allder king story does stand up, then contempt rather than respect is the word that springs to mind. Often though this is pure laziness with both the “professionals” and bankers too often working in a bubble
Perhaps unusually in the finance brokering world, I am not from a banking background but do have extensive experience on the “other side of the fence” in sectors such as music, advertising and manufacturing. I believe I have empathy and certainly respect for those that struggle and commit to build a business from scratch. Certainly more respect than I could hold for those bailed out after making catastrophic mistakes which were borderline criminality
Which perhaps brings me back to the above case. I cannot call the judgement and the finer points of the law in this case are not my specialist area but the very fact that these alleged cynical practices do not come as a surprise, is the biggest issue of all
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