Commercial lending cut by Nationwide
The credit crunch that has taken a hold across the UK since the summer of last year has had damaging effects in many areas of the financial industry.
Most notably customers across the UK have found it increasingly difficult to get finance as a result of lenders tightening their belts and being increasingly cautious over who they will lend money to. This is partly to do with concerns over potential defaulters that could lead to higher bad debt levels and partly because of the higher inter-bank lending fees that have stemmed from the credit crunch.
However, according to reports it is not just private consumers that are being affected with a reduction in the choice of financial solutions available, as businesses are also being affected when it comes to being able to borrow money.
The commercial division of the Nationwide has recently announced that it will no longer be considering loans to new customers and will only deal with existing borrowers. The building society has also stated that it will not be accepting referrals from brokers for its commercial division.
One official from the commercial division of Nationwide stated: "I am using market conditions to be very selective about the type of lending we do. There is an enormous appetite out there for borrowing, half of my competitors have disappeared and a lot of people are looking for finance."
He added: "We want meaningful relationships with customers and because of this we feel this is the time to stand by our existing customers rather than take on new customers."
Official from the Royal Bank of Scotland have denied that the bank has taken a similar stance, stating: "At times like this you have to remain true to your principals. When it comes to lending money you always have to be fairly cautious and prudent and nothing has changed. We feel that our relationship management model is robust and comes to the fore at such times as we are engaged in long-term strategic debates with our customers, and funding lines are put in on this basis."
17th January 2008