COMMERCIAL-IN-CONFIDENCE
SFS usually have only one account, and there is evidence that SFS do not often change banks; the Federation of Small Businesses claims that in recent years the main clearing banks have been unwilling to accept new customers. SFS usually change banks only when their relationship with their bank has broken down. It seems that to a certain extent SFS are locked into their current banks.
16. SFS typically require banking facilities which are located close at hand (Lloyds says that most small business customers come from distances of no more than 1 mile in towns and 5 miles outside). This is particularly in order to pay in and withdraw cash, and because the businessman expects to see his banker at frequent intervals. Branch managers also frequently visit their customers' premises.
17. In contrast to the clearing banks, Building Societies are unable to offer unsecured loans and even the Abbey National, which became a bank in 1989, has not attempted to enter this market, because of its specialised nature, and the staff training that would be required. The TSB has also had difficulty in developing this business for the same reason.
18. Some other banks, such as the Yorkshire Bank, the Cooperative Bank, the Scottish, foreign and ethnic banks provide loans and other facilities for small busineses, and provide real competition in certain parts of the country, primarily in the urban areas, but they do not have a significant share of business on a national scale.
19. Entry into this market therefore apears to be restricted by the need to set up premises, acquire and train staff, invest in information technology, and develop a relationship and understanding of the business of local small firms.
20. A number of studies of the SFS market suggest that the combined market share for Lloyds and Midland in England and Wales (neither has a significant presence in Scotland or Northern Ireland) lies between 29 and 36 per cent, with no figures outside this range, although Lloyds says that their share of new accounts is only 27 per cent.
21. Lloyds figures for numbers of current accounts in 1990
are:
Table 1 Shares of numbers of accounts by small firms (turnover less than £1 million), 1990
Percentages
Midland
15
Lloyds
15
Combined
30
Nat West
29
Barclays
26
TSB
3
5
COMMERCIAL-IN-CONFIDENCE