According to a Treasury Committee inquiry, over the past year, 2.7% of SME accounts, equating to 141,620 out of approximately 5.3 million, have been closed by major banks including Barclays, HSBC, TSB, Lloyds, Santander, NatWest, Metro, and Handelsbanken.

The closures, as explained by the banks, stem from a variety of reasons such as:

  • risk appetite
  • concerns over financial crime
  • issues with information sharing.

Interestingly, only three banks explicitly listed 'risk appetite' as a closure reason, totalling 4,214 cases. However, this does not eliminate the possibility of other banks considering risk appetite in their decision-making process without openly acknowledging it. This situation highlights the complexity and challenges faced by SMEs in securing financial support from their banks in the UK.

Chair of the Treasury Committee, Harriett Baldwin, said:

"One of the most startling pieces of evidence emerging from our inquiry into Access to Finance for small and medium-sized businesses is the readiness of lenders to close business bank accounts with little or no notice.

"Our Committee believes that any company engaged in a legal business activity in the UK should be able to find a bank to offer them a bank account.

"The fact that only three lenders included ‘risk appetite' in their criteria indicates these discussions may not be systematically recorded - leaving questions over whether decisions on the de-banking of certain businesses, based on what banks perceive as a risk, are happening informally."

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