MA300: NatWest says it's open for business and wanting to lend more

Andrew Taylor, head of leisure for commercial banking at NatWest and RBS, said 165 firms, including c35 pub businesses, had so far taken debt funding.

Speaking to an audience of more than 100 multiple pub and bar operators at the MA300 event in Leeds on Thursday, Taylor also highlighted a survey of leisure customers that suggested a return of optimism in the leisure industry. And he advised on what banks like to see from companies before they lend them money.

Taylor cited Number One Bar, Bath Ales and Elysium as pub and bar operators that have so far received debt funding under the scheme launched in May.

“I’m pretty confident that we are open for business and we are lending money and we would like to lend more,” he said.

Confidence​

A survey of NatWest’s leisure business customers in May found three quarters optimistic about 2013, while half believed their business would grow.

More than half agreed that it’s currently not too risky to invest.

Taylor said: “There is a sense I get that confidence is starting to return. I think confidence is really important. We can talk ourselves into and out of recession.”

Taylor listed a number of things he said banks were looking for from companies. These included:

• Viability. “Typically in the leisure sector that revolves around cash generation.”
• Proof of concept. “Does it work? Has it been demonstrated to work in more than one market and is it scalable?”
• Strategic rationale. “Is there a plan? Is there a long game? Do you have an exit plan?”
• Location. “We want to see the assets in good locations.”
• Wet:dry mix. He said there’s an acceptance that within central London “the wet-led market is very strong” but would look for businesses to have a greater food mix outside that region.
• Management capabilities. “There’s probably a point at which you see you will need to invest in a head office function.”
• Budgeting. “At the end of the day, bank debt gets paid out of cash not profit, so what we are looking at is cash generation.”
• Single and multiple site operation.
• Freehold and leasehold mix. “Freehold is the easiest to lend against,” he stated. Leasehold is “a little more challenging” and Taylor said lending couldn’t extend beyond the term of the lease. “What we can do is look at a combination of freehold and leasehold,” he said.