The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

UK banks abandon SMEs to the challengers

OakNorth shows that SME lending need not be unduly risky and can be highly profitable, and other new banks are following its example.

eggs-nest-robin-780

At the end of April, OakNorth, the new, profitable and fast-growing digital bank that makes loans of between £500,000 and £40 million to fast-growth UK businesses and established property developers, announced four new hires of experienced bankers to oversee expansion in Manchester, Birmingham and Bristol.

These new arrivals from Europa Capital Debt investment, RBS, Investec and HSBC join a bank that has lent £3 billion since launch in late 2015, more than doubling loan facilities in the last 12 months. After taking just 11 months to break even, OakNorth trebled profits last year to £33.9 million up from £10.6 million in 2017.

It’s not meant to be like this. The UK’s small and medium-sized enterprises are labouring under the threat of Brexit, reluctant to invest for expansion, worried about the domestic economy and fearful of export prospects.

While Bank of England data show lending to large companies growing at 6% recently, lending to SMEs has flat-lined for three years. Almost half of UK SMEs are now classed as permanent non-borrowers, supposedly happy in that condition; although it is not clear how many decline even to apply for bank loans for fear of being turned down.



You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree