The Invercarse Hotel set out to add 24 bedrooms and revamp its restaurant, backed by a six-figure funding package from Bank of Scotland.
It is the kind of deal which, for Fraser Sime, is a proud example of the bank’s support in fostering economic growth.
Sime is the bank’s regional director for small and medium-sized enterprise (SME) banking. He is discussing his team’s role from the organisation’s head office that was built in 1806 on the Mound. It is something of a symbolic location as the bank – which was founded in 1695, and claims the role of Scotland’s first and oldest bank and one of the first in the UK – works to catalyse the fortunes of firms across Scotland with capital and counsel.
Sime spearheads a team with customers in the thousands – mainly in the £3 million to £25m turnover bracket – as well as some smaller companies with more complex needs.
“Every business is different, every business is fascinating and every business has got an opportunity, no matter what the economy throws at you,” states the banker, who leads a department of about 60 relationship managers and directors divided between six area teams spanning Scotland.
This reaches up to Orkney, Lewis and Oban, down to Dumfriesshire and the Borders, “and everywhere in between”.
“It’s a remote team, at times. But our clients, particularly when you look at tourism and food and drink, operate in all the corners of Scotland, so I think it’s appropriate that we are represented all over the country.”
The Mound office is now also the Scottish HQ of Lloyds Banking Group, the new entity created after the 2009 acquisition by Lloyds TSB of HBoS – which itself came into being after the Bank of Scotland merged with the Halifax in 2001.
Sime also represents SME business on Lloyds’ Scottish executive committee chaired by Philip Grant – the group’s “ambassador for Scotland”, who earlier this year was named chairman of Scottish Financial Enterprise.
“We have our part to play in the wider group and commercial banking goals,” says Sime, noting Lloyds’ pledge to lend £18 billion to UK businesses, and support firms in Scotland with up to £1.6bn of lending this year.
The latter, the banking group noted, is to support entrepreneurs looking to start a business, microbusinesses seeking to scale and small businesses considering global trade – all the way up to large multinationals seeking further growth.
“That is a huge commitment – it transcends not just my business… it is effectively the commercial customers in Scotland who will benefit from that,” says Sime.
Lloyds said in July that in its first half it contributed £10bn of gross new lending to businesses, and was on course to meet its £18bn target. While there was no breakdown of the figures at a Scottish level, Sime is “pretty confident that we’ve played our part in that as well”.
The banking group was bailed out to the tune of more than £20bn during the financial crisis, returning to full private ownership in 2017.
“Anything that agitates growth, we have to spot that opportunity and then work out how we support our clients along the way,” says Sime.
A key focus for his team is the flourishing tourism, food and drink sectors – which he sees as all being tightly interwoven. “I guess one of the things that excites us is the commitment from the Food Tourism Scotland Action Plan to try and derive incremental revenue to the Scottish economy of £1bn by 2030, almost making Scotland a global tourist destination.”
In his view, the Scottish economy has historically had more of a business-to-business tilt, which is now being supplemented by the growth in the business-to-consumer segment. And the influx of tourists is having a significant, positive knock-on effect on many other parts of the economy, he continues.
Beneficiaries include B&Bs and hotels, for example along coastal route the North Coast 500, also extending to the likes of manufacturers. Sime cites McLaren Packaging, which serves the food and drink industry and secured a seven-figure funding package from Bank of Scotland for a manufacturing, design and testing centre that opened in 2018.
Additionally, the food and drink sector north of the border employs 45,000 people, a quarter of the Scottish manufacturing workforce, according to the Food and Drink Federation. Furthermore, exports of food and drink from Scotland were last year worth £5.8bn.
Yet such firms are operating against an unsteady backdrop, with Sime – a chartered accountant by background – providing commentary for Bank of Scotland Commercial Banking’s regular business barometer.
The picture has “fluctuated” when you look at 2019, he says, with July seeing business confidence in Scotland falling 17 points to zero per cent, after rising 17 points in June.
However, the number of respondents each month can vary, Sime explains. “If you look at the average over 2019, you see a picture of very modest growth in terms of outlook, which I think reflects quite accurately when you see Scottish and UK GDP.”
Scottish GDP in the first quarter of 2019 saw a quarter-on-quarter jump of 0.6 per cent and a year-on-year increase of 1.5 per cent, behind the UK’s 0.5 per cent and 1.8 per cent respectively.
Bank of Scotland’s role, he explains, is “irrespective of what is going on in the broader economy, how do we find a way to help our clients thrive and prosper?”
Financial tools available include traditional term lending, for example to fund an acquisition, and invoice finance as the lender looks to help release working capital – with £33.2bn tied up in Scotland.
Sime also sees the Bank of Scotland brand’s provenance as dovetailing with firms looking to harness their own histories and heritage.
That said, it was announced in June that Bank of Scotland was being fined £45.5m by the Financial Conduct Authority for failures to disclose information about its suspicions of fraud at its Reading branch.
Sime says he is “not best placed to comment” on such broader issues, “but on a local basis, the important thing is for us to help continue to promote what is a powerful brand up here”.
He has been around the banking group for more than two decades, having taken business studies and accounting at the University of Edinburgh.
“I’ve always had an interest in business. I think it’s the breadth of opportunities… no two days are ever the same, no clients are ever the same, you’re never quite sure when you go into a meeting what’s going to come out.”
And he says he has stayed with the same organisation for so long as it has provided a variety of duties, including a spell as head of corporate finance for Europe at HBoS. “It keeps you challenged,” he says of his variety of posts.
“Hopefully, having seen so many different parts of the commercial bank, when you’re running a franchise like the SME business… the fact that I’ve seen how the operations work from so many different angles I think helps to make better decisions than perhaps I would have done ten years ago.”
And he still enjoys talking to clients as much as possible. “When you work with an SME client, you get incredibly close to the owners, the family, the decision- makers – and that is really rewarding seeing how a conversation can make a difference.
“If our clients are successful, and we’ve played a part in that, then hopefully we’ll be successful too.”