David Wood: Banks must mark the playing field clearly

The coalition government had already taken shelter against bank over-exuberance, by introducing a levy on balance sheets from January and launching the Vickers review of bank competition. At the same time that banks continue to face direct pressure from government, it is clear that traditional access for businesses to bank finance has changed for good.

Banks have said they are keen to and will lend to "viable" businesses. However this raises the question: were banks happy to lend to businesses that were not viable in the pre-financial crisis days? The worrying answer to this might be yes.

Recently the Institute of Chartered Accountants of Scotland (ICAS) and Scottish Financial Enterprise gathered together entrepreneurs to hear their thoughts and experiences of raising/re-negotiating finance over the past 18 months.

They all believed they ran viable businesses and yet all told a similar tale of woe in terms of talking to their bank and the often brick wall response they received.

If the lending landscape has changed and those businesses that see themselves as viable have in fact been downgraded by the banks to below that line then there must be clear public communication by the banks to let businesses and their advisors know what the playing field is – never mind having it level.

This shouldn't degenerate into the banks looking upon this as competitive advantage territory and thus reluctant and/or unwilling to make public what they consider to be viable – this will not help and may lead to another bank-bashing session – which will also not help.

Greater transparency by the banks would be a welcome thaw in the frozen finance pond and help businesses see what lies below the surface for the year ahead. l David Wood is executive director of technical policy at the Institute of Chartered Accountants of Scotland