What Exactly Are Banks For?

Plenty of rumours doing the rounds this week, HSBC about to lay off a large number of staff, Barclays struggling again - all rumours of course. The word on the accountancy lecture circuit is that bank to bank loans have all but finished in the U.K for the time being, this is a repeat of what I was being told back in July.

Three recent examples of how banks are starting to panic:

1. Client needs £350,000 loan for one day to purchase piece of land and asks one High Street bank - they say fine we will charge you an arrangement fee of £7,500. Flabbergasted the client goes over the road to the bank with the black horse and they say fine, we'll charge you £750.

2. Client with twenty five year loan on property worth around £4 million at the top of the market, bank suggests that loan is renegotiated at......11.25% above Base Rate!

3. Solicitor client is conducting a property conveyance on behalf of a client, everything is set-up, telegraphic transfer takes place from outgoing bank but incoming bank loses the £750,000 in its system. Incoming bank says transfer didn't take place and purchase falls through. Purchaser sues my client, my client issues complaint against bank and gets £250 compensation. Not sure how much house you can buy in Winchester for £250.

4. Same client requests sample of paid cheques so that I can complete Solicitors Accounts Rules form for year ended 31st March 2008. Cheques requested in May. Despite constant phone calls cheques don't arrive, finally yesterday the bank admit that they may have been lying when they said cheques were being sent. Cheques arrive today, except they aren't cheques written by my client as requested but cheques paid to my client, also they are for June 2006!

The bank in the above examples was the same. Obviously I'm not going to name them but they were the first bank mentioned in the opening paragraph!