The authorisation process with the FSA included stringent stress tests on the business plan, viability, liquidity and capital. Our current, very high Capital and Liquidity ratio figures give very little indication to our financial position as we have recently launched and are yet to build up a substantial loan book. However, the upshot of this is that we do not have a history of unpaid loans, or a ‘bad book’, thereby strengthening our financial position.
Both the management of the Bank and the owners have a conservative approach to risk management and the bank will hold levels of capital and liquidity comfortably in excess of all regulatory requirements, and we see our primary banking responsibility to be to protect our depositors.
As well as our own reassurances, we are a member of the Financial Services Compensation Scheme (FSCS) which protects the deposits of small to medium sized businesses which meet their criteria; full details of which can be found at www.fscs.org.uk.
We operate a simple, traditional banking model where we take in savings from organisations and lend funds to small and medium businesses. We don’t therefore invest in areas such as the stock market and the majority of the cash that we hold over and above what we lend is held with the Bank of England.
In terms of who we lend to, our focus is on ensuring we are lending to established, financially stable, good quality businesses based in the UK. We do not lend to high risk businesses, nor to those involved in the arms industry or other industry sectors which do not meet our traditional lending criteria. Our typical lending is to businesses in our key regions, where we have Business Development Managers on the ground that know those areas. We lend to commercial owner occupiers in sectors such as manufacturing and also to residential and commercial property investors. We also offer Asset Finance secured on items critical to the business operation such as plant machinery.
Our owners, a Cambridge University College and a Local Government, do have a prudent approach to any risk which includes reputational risk arising from any organisation we lend to.
The PRA is part of the Bank of England and has a primary responsibility to ensure the safety and soundness of the banks and other financial institutions which it regulates. More information on the PRA can be found here.
The FCA reports to the Treasury and their aim is to protect consumers, ensure the industry remains stable and promote healthy competition between financial services providers. More information about the FCA can be found on their website at: http://www.fca.org.uk.
Cambridge & Counties Bank is authorised by the PRA and is regulated by both authorities.
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