Banks doing business

RBS Business & Commercial Banking is a proud sponsor of the Law Society of Scotland’s 60th annual conference this year. In the six decades it has been taking place, the conference has grown and developed into an event that is widely recognised for its ability to reach the heart of the issues shaping the legal sector in Scotland.

We recognise that small and medium sized businesses, including the larger corporate legal firms, are the driving force behind the Scottish economy, accounting for the vast majority of companies in Scotland and almost half of total employment. To support and reassure businesses through the current economic downturn RBS has launched or subscribed to various Government lending initiatives in recent weeks, with the intention of boosting the amount of money being made available to UK businesses. We are aware that there has been some confusion over the scope and nature of these initiatives, so it is probably worth setting out some details about each here.

The Enterprise Finance Guarantee (EFG) Scheme is a Government-backed initiative which was unveiled in January this year with the intention of providing necessary working capital or investment finance for profitable businesses to help them through the difficult economic climate. It will support up to £1.3bn of new lending across the UK, with loans of between £1,000 and £1m. Under the EFG scheme the Government guarantees 75% of any loans made, with the bank covering the remaining 25%.

Whilst there are similarities between the two, EFG is not simply a reincarnation of the now defunct Small Firms Loan Guarantee Scheme (SFLGS). EFG provides broader eligibility criteria in terms of loan amount, purpose, and sector availability and, for the avoidance of any doubt, firms in the legal sector are eligible for EFG lending.

In February, RBS announced the creation of a Regional Fund for SMEs, through which we are making an additional £250m funding available to businesses in Scotland in 2009, to be delivered through a comprehensive package of funding choices. In addition to providing traditional debt finance, the new funds offer businesses the opportunity to access alternative financial products that could help them manage their capital and cash flow through the current economic downturn. This money is distributed locally by our customers’ existing dedicated business relationship managers.

Additionally, we secured £250m funding from the European Investment Bank, which we are making available to customers looking to borrow over £25,000 via reduced interest margins compared with standard term loans.

For the Scottish housing market, RBS made a firm commitment in March to make £1.7 billion of new mortgage lending available during 2009, as part of an extra £9bn package for the whole UK. We have also committed to meet further customer demand if it is higher than the £1.7 billion already pledged. The bank will continue to develop a broad range of mortgage products including finance offers of up to 90% loan-to-value, to help first-time buyers step onto the property ladder. We hope this will enable the market to start moving again and thus create opportunities for solicitors, whose fortunes are often considered a good barometer for the state of the wider economy.

RBS is therefore very much open for business.

At RBS, we believe it is critical to demonstrate specific expertise in certain industries or sectors. We have invested in a dedicated relationship team comprising legal profession specialists, each of whom understands the issues shaping the sector and is able to offer expert advice and support for firms operating within it. However you see your firm evolving, it is more imperative than ever that you stay close to your bankers, as their advice and quick action could just prove invaluable in these turbulent times.

The current economic environment will create opportunities for businesses as well as challenges. With our strengthened financial and funding position and the ongoing support of the Government and the central bank, we at RBS are able to continue backing our customers in the legal profession.