Put very simply banks, especially large banks enjoy economies of scale. If they want to make money they do preferential lending to big customers. Big customers put more money in more branches mor widespread across the country or globe than small customers. Big customers demand that banks treat them preferentially.
So why is the British Prime Minister surprised that he cannot get big banks to lend to small business?
It should be obvious.
Big banks have both customer small and customer big as customers. Customer small asks the bank for a loan that will take away business from customer big. Bank says no to customer small because it wants the revenue of customer big to continue and figures customer big is the better bet. Banks research their customers competitive positions and get outside advice on business prospects.
If customer small and customer big are bidding for the same government procurement contract, do you think that the bank does not know. Think again because the bank has all the information of customer big and small it needs to decide which it wants to lend to. Customer big deposits in many branches and in key important branches, while customer small banks in a few branches somewhere! When the branch manager of a bank branch assesses customer big, there is a routine and similarly with customer small.
Head Office has the final say and takes two piles of files, one for customer big and one for customer small. Weighing both and taking into account relativities, customer big wins in the mind of the bank.
What happens in the government office is not so very different though it relates to familiarity breeds friendship. The supplier big is more prevalent and has more friends, especially the bank that finances or smoothest it's financial operations. Supplier big is well known and offers fewer head aches. Who would you think will win the government procurement contract? This is not yet eBay!
Will not time reveal the lasting importance of friends and mutual respect? Be kind to those who think well of you and those you know and try to add positive elements to your world. Promote peace in your heart and sunshine in the minds of those around you by your own good works. Elevate the level of discussion by thinking less of the issues and more of how you can reduce the tension of stress that arises with honest disagreement. Relax by breathing more deeply and consciously.
