Martin's Mailbox: Lie-bor and BDMs

Martin's Mailbox: Lie-bor and BDMs




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So what have Libor and BDMs got in common? On the face of it, not a lot. But there is a loose connection with regard to the future dynamic and direction of the bridging sector. Both have also been grabbing their fair share of the headlines over the past week or so.

While I’m usually reluctant to stray into national press territory – where there are plenty of talking heads only too ready to offer their ‘expert’ advice and opinions – the matter of Libor and how it was manipulated is simply too good to miss.

What’s clear already is that a clique of Barclays traders saw fit between 2005 and 2007 to benefit themselves by tweaking their rate submissions. The price paid by the bank is a whopping fine, and the loss of a CEO and his senior lieutenant.

What isn’t clear is what happened in 2008 and after when the financial tsunami swept across the globe; were Barclays and others encouraged by influential figures outside the commercial banks to carry on fiddling Libor to underplay the extent of the crisis? We’re still waiting for the answers.

What’s also clear is the extent of the turmoil in the UK banking sector. However you spin it, they’re in a mess. Reputations have been trashed, vast sums of toxic debt remain on balance sheets (although it’s coming down), regulatory challenges are coming thick and fast, and they can’t get their computers to work.

On a personal level, I take little satisfaction from this state of affairs. I can see why we need an efficient, profitable and reputable banking sector. Without one, we face an even greater struggle to haul ourselves out of recession. From a professional perspective, however, I couldn’t be happier.

My senior colleagues and I reckon it will be another three to four years before the banks get their act together and start properly lending again. There’s absolutely no science behind this – it’s finger-in-the-wind reasoning – but I’d be hugely surprised if they come back any sooner (but unsurprised if it’s longer).

You can see where I’m going with this. So long as the mainstream boys are distracted by their self-inflicted problems, the lending field remains wide open.

There’s only so much short-term lenders can do to fill the gap, but it’s an opportunity of which we’re well aware. Presuming strong funding, the key is to nail down the right distribution strategy to maximise lending opportunity.

This is where the BDM comes in. As an ex-relationship manager myself, I know the true value a good salesman can add – both to employer and brokers. It’s particularly so in bridging where relationships really matter.

This might help explain the sudden flurry of BDM moves and appointments last week. As lenders look to up their game in the face of ever-spikier competition, I reckon there’s an appreciation that technology has its limits.

We’re not in the mass-volume business, and speed is not necessarily the overriding destination in the service stakes. What counts for more are trust, co-operation and effective communication. A good BDM is the cement that helps bind together valuable relationships.

On this basis, I expect to see more BDM moves this year. The best deserve appropriate reward and recognition, but I hope we avoid the excesses of the sub-prime boom years when first-class mediocrities were able to command huge salaries and flashy cars. After all, we wouldn’t want to be thought of as bankers, would we?

 

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