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UK Banks Hold Internal Investigations Into Business Loan Practices


After a financial watchdog raised the issue, banks in Britain are looking into whether they pressed businesses into giving them more work in exchange for loans amid the pandemic. Lenders, with the inclusion of Santander, Deutsche Bank, Barclays and HSBC, are holding internal probes to see if their investment bankers sought to connect crisis funding to more remunerative offerings, the Financial Times reported, citing unnamed sources.

Compliance teams at financial institutions are reportedly looking into computer and phone transaction records as no in-person meetings have occurred amid the two-month pandemic lockdown of Britain. A senior Deutsche banker who was not named in the report said, “There have been concerns about mixing plain-vanilla loans with more complex markets products and a hard-sell approach to firms who might not understand what they are getting into.”

The Financial Conduct Authority (FCA) had sent the leaders of British lenders a letter after they got “credible reports” that some were reportedly taking advantage of their lending relationships with customers who were having difficulty to compel them into purchasing other offerings, as they discussed new or current debt facilities.

The report, however, was said to have noted that there wasn’t evidence of misdeeds on the part of any of the financial institutions. Santander said per the report, “We are entirely committed to treating our customers fairly and complying with the expectations of our regulators.”

Deutsche Bank said per the report, “As you would expect, and in line with our standard response to industry guidance from the regulator, we are carrying out a precautionary review of our activity.” It also noted, “This is not because we have particular concerns; it is simply the appropriate action to take in response to the letter.” HSBC and Barclays did not comment per the report.

In separate news, British government officeholders and firms had criticized financial institutions for mandating personal guarantees for state-backed crisis loans per a March report. At the time, it had noted that the move puts most of the risk that the loan goes bad on the owner of the firm in lieu of the institutions.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.