By Max Clarke

Tomorrow (Monday) will see the publication final report of the highly anticipated Independent Commission on Banking.

Designed to boost transparency within the banking sector and enhance lending from the nation’s leading financial institutions to credit starved enterprises, as well as introducing reforms aimed at improving their overall stability, the Commission’s final report has largely been well received by business groups.

Writing in response to an article published by Max Clarke on Friday 11th, Nasir Zubairi, Managing Director EuroTRX commercial finance firm, has suggested that the government’s sole focus on the leading financial giants has seen smaller, more specialized and ‘resilient’ lenders and investors. Doing so, he writes, would increase competition and place the UK economy on a more stable footing than the continued dependence on the ‘big four’ banks.

"Project Merlin", writes Zubairi, "is a noble initiative but is ultimately falling short of delivering the boost to small and mid-sized enterprises (SME) lending the UK economy desperately needs. There is a fundamental misalignment of incentives within the banks and there is little anyone can do to forcefully push these institutions to lend more to small business.

"The government must look beyond the banks, to smaller, independent financial firms that have a greater risk appetite, are more agile and streamlined in their operations and cost structures, and that are keen to diversify their exposure into the SME sector. It will be interesting to see if the commission's report on Monday follows on from the theme of the interim banking report published earlier this year in alluding to the beneficial role that these non-banks can play in the credit market.

"My belief in the need for structural shift in the industry spurred me to setup EuroTRX. I recognise that one of the key issues of opening up the market to new funders is one of distribution and sourcing - connecting SMEs with the institutions, in the right way, at the right price, with transparency and the right risks.

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