Business queues up for 'intensive care' units

Number of businesses being referred to 'intensive care unit' on the up as banks are scrambling to meet the increased demand for help
Written by David Jetuah
Accountancy Age, 23 Oct 2008
A major bank has beefed up its ‘intensive care unit’ dealing with companies at risk of going bust, as other banks say they are scrambling to meet increased demand for help.
Insolvency practitioners have said the number of people being referred to the units has shot up in recent months and Lloyds TSB told Accountancy Age it had taken steps to cater for increased activity.
‘We have increased staff numbers in our business support services unit. If we are recruiting it’s clearly evidence of a very difficult time over recent months,’ said a Lloyds spokesman. ‘There has been an increase in the numbers of businesses talking to us.’
One IP said that the banks had been ‘hiring like crazy’ at their turnaround departments, but other banks said only that the work was increasing.
‘There has been no real change in headcount, but there are more people coming to us,’ said an HSBC spokesman. ‘It’s at times like these when the relationship a business has with its bank is critical.’
The banks are currently trying to stave off the effects of a jittery market, but the number of comp-anies approaching the intensive care units can be taken as a barometer for conditions on the ground.
Some banks remained guarded about their activities. The banks usually split their services into business banking, dealing with operations that have a turnover of less than £1m, and corporate, which deals with business generating more than that amount.
HBOS said it had not seen any ‘significant’ headcount increases within the high risk teams of its corporate division, but companies coming to them for advice was ‘not something that we’d comment on and we don’t give out headcount figures for any of our divisions,’ a spokesman said.
Barclays had not replied at the time of going to press.
IPs are still bracing themselves for the full brunt of the credit crunch to hit smaller businesses at the coalface of the economy, which accounts for the close eye being kept on activity levels at the intensive care units.
The renewal of banking facilities will be critical for companies in the coming months as banks continue to take a tough stance on lending, according to one leading IP.
Despite IPs being busy, the expected spike in insolvencies has not yet materialised. ‘We’re close to Armageddon, but we’re not quite there yet,’ one said.