So the big news from the Independent Commission on Banking (ICB) is the division of retail and investment banking operations by 2019. But it wants to draw a line under Lloyds TSB branch closures. Bad news for small businesses, but good news for the invoice finance sector?
The ICB may have laid out a plan for sweeping reform of the UK banking system, albeit on a sedate schedule, but the SME sector is likely to see the report as a failure. With firms pushing for better SME lending facilities and greater business banking competition on the high street, the decision not to force Lloyds TSB to sell more than the 632 branches specified by the European Commission will be a disappointment.
But Sir John Vickers’ leniency towards Lloyds TSB could be a boon for the invoice finance sector. New figures from the Asset Based Finance Association (ABFA) show that invoice finance, including services such as invoice discounting and factoring, has continued to grow in popularity among small SMEs. Data from the second quarter of 2011 shows that members of the ABTA generated finance worth £15.7 billion over the three-month period, an increase of 12% over the previous year.
The ATBA has now reported growth in this business funding figure for five successive quarters, a trend that shows that firms are increasingly opting for this type of business finance over other lending forms, including traditional high-street lending from the big banks. Given the move by Sir John Vickers to spare Lloyds TSB from further high street closures, it seems highly likely that this relationship will continue to grow.
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