Banks put squeeze on lending to PR agencies with public sector clients

PR agencies with a high dependence on public sector clients are finding that banks are refusing to lend them money.

Banks refusing to lend to public sector agencies: Barclays
Banks refusing to lend to public sector agencies: Barclays

Following the Government's marketing freeze and the looming threat of further cuts in the coming years, reports have come in from the agency world that banks are increasingly asking what percentage of clients are in the public sector when arranging overdraft facilities.

One senior agency source said: 'If the answer is "a lot" or even "quite a bit", then banks are taking a very dim view, because these contracts are being slashed left, right and centre.'

A source at Barclays said that government contracts had been and continue to be 'one of the areas that we do look at when discussing the financing of agencies'.

Allied Irish Bank also said this would count when lending to agencies.

A spokeswoman said: 'As with any business, you look for a sturdy business case before you lend. There is a whole series of criteria, but it is likely we would look at their customers, as they would determine their future.'

However, HSBC head of UK media relations Mark Hemingway said: 'It is a factor, but no more than that.

'It's not all of the public sector that has been impacted. Yes, there are cuts planned but these cuts may not have been reductions in actual spending, just a temporary pulling back. A lot depends on their relationship with the particular public sector bodies. We're not putting any more weight on this than before.'

Santander and Royal Bank of Scotland - which also owns NatWest - denied that any such decision-making process would take place.

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