The rich, the poor, the entrepreneur - the banker's role

My brother Marek e-mailed me with his observations about my last post, pointing out the importance of the banking sector to the entrepreneur. Indeed - such a valid point that it will make a separate post.

Looking in stereotypes, the British believe the Germans have got it right. Their Landesbanks provide a capital lifeline to small and medium-sized family-owned businesses for generations. They know their clients personally (often having a banker sitting on the firm's supervisory board). When the firm needs money to buy another production line because it's just won a new order in South America, the bank looks at the firm's track record and says "by all means".

In the UK, the banks have done away with personal relationship managers and have outsourced the loan decisions to a call-centre in Bangalore, which mechanically ticks the boxes and says 'no', just in case. Online banking has many positive facets for the consumer, but for the small business it has killed off the personal nature of the banking relationship. "Lend to the man, not to the asset" was the golden rule for Mr Mainwaring and his generation of bank managers, who knew their customers, but this is no longer the case. Today, UK banks talk of 'relationship banking' as if it were a new discovery; the truth is they lost it long ago and are now trying to rebuild it on the basis of call-centres, internet banking and algorithms that replace loan decisions.

Now that the economy is on the rebound, British banks have only got worse in this respect. Want to borrow money to buy a house on a rising market? Why certainly! Mortgage lending is back to 2008 levels. Want to borrow money to expand your small business...? Ooh... That's a bit difficult... We'll need to send someone over to check your business in person, but that costs us money, so we won't bother, so to save time, our answer is no. Bank lending to business is 30%-40% down on 2008 levels (depending on sectors and regions).

What's it like in Poland? Banks have generally tended to say 'no' from the outset (that lack-of-trust issue again), so Polish entrepreneurs have just got used to financing growth out of saved earnings. Over the economic slow-down (no recession here, remember!), Polish entrepreneurs drew in their horns and sat on their cash, tempting politicians to tax it or somehow put it to better use.

Poles, like Brits, look across to Germany's Landesbanks as the ideal model for small- and medium-size businesses, yet another reason (along with apprenticeships, a high social regard for engineers and manufacturing industry) why the German economy weathers the storms well (and can still afford to bail out the lazy southern Europeans).

Ethics in banking? Polish bankers are nowhere nearly as well paid as their British counterparts. The result is that here in Poland, people have no problem inviting bankers to dinner parties, saying 'hello' to them in the street, or generally treating them as fellow human beings.

The Polish banking sector is generally in sound shape, but still has much to learn about working closely with the entrepreneur for the benefit of the economy at large.

This time two years ago:
At the hipsters' ball

This time three years ago:
Cycling through the spirit of place

This time four years ago:
Invaders or liberators?

This time five years ago:
Adlestrop, en route to Kraków

This time six years ago:
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