At least this year’s British Property Federation conference on Tuesday had some memorable speeches. City minister Lord Myners likened the banking crisis to a night of heavy drinking and admitted that ministers were no longer allowed to say the overused and universally-hated term “green shoots”; meanwhile Stephen Hester, chief executive of the Royal Bank of Scotland, forgot to use the standard line about current conditions being “unprecedented” and said that politicians and businesses knew the downturn was coming, they just didn’t do much about it.
Mr Hester told executives attending the event: “We all saw this coming but none of us did much about it… We all predicted it but forgot and got on with business.”
However, the head of the part-nationalised bank did add reassuringly: “The point when banks were toppling over has passed.”
Announcing plans to rein in lending to property companies following serious falls in commercial property prices, Mr Hester said: “We will never lend as much to real estate as we’ve done. We won’t be the highest property lender for a while.”
RBS accounts for almost 30% of UK bank loans to the commercial property sector. This overzealous expansion in commercial and residential lending contributed to the bank being brought to the brink of collapse last year, facing the largest corporate loss in UK history and eventually having to be rescued by the government.
Mr Hester went on to say that although the economy has not started to recover yet, the pace of decline is easing. “We've turned from a state of terror to a conventional recession. Recessions take familiar patterns – we start to feel more in control of the future.” He added.
City minister Lord Myners, also speaking at the conference, told attendees: “Quite frankly banks were being foolish in some of the terms they were offering. We’ve had a seriously big night of drinking and recovery will take a while.”
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