BusinessCorporate FinanceMandelson chides banks for being ‘too conservative’

Mandelson chides banks for being 'too conservative'

Banks risk more damage to their balance sheets by their conservative lending practices, Mandelson warns

British Business Secretary Peter Mandelson has chided the banks for having
adopted too conservative lending policies in the liquidity crisis, risking
further damage to their balance sheets and profits by failing to provide cash to
small business.

There was a ‘disjunction’ between what he was hearing from firms around the
country and bankers in London,
Reuters
reports. ‘The banks have experienced a sharp liquidity crisis,’ he told the
Guardian newspaper. ‘They have lent too much at too cheap a price for
too long. But they are now overreacting to that, in my opinion, in too
conservative and restrictive a way.

‘They are in danger of substituting one set of problems for another, and in
the process doing themselves further damage by underlending and not
strengthening their balance sheets and profits in the longer term. They are
close to cutting off their noses to spite their faces.’

Mandelson put no-one’s mind at ease, seeming to contradicting official
government forecasts of last week that the economy would start to recover in the
second half of 2009, by saying he did not know how long the recession would
last.

Further reading:

Darling urged to help SMEs

Read
The Guardian story

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