International Financial Law Conference, Berlin Germany 2019

Author:Mr Liam Flynn and Joe Beashel

The difficulty of obtaining finance for the SME sector was under the spotlight at a panel discussion at the International Bar Association's International Financial Law Conference in Berlin, Germany, on 16 May 2019, co-chaired by Matheson Financial Institutions Group partner Liam Flynn. The focus of the panel was alternative lending, which was broadly interpreted to cover lending by alternative finance providers, such as insurers and pension funds, and lending by non-traditional means, such as marketplace lending. Liam and fellow co-chair Giuseppe Schiavello, founding partner of Schiavello & Co, Rome, put together a panel representing various constituencies in the market, including Josefin Lindstrand, recently nominated to the board of Swedbank, Tom Parachini, of Funding Circle, Matteo Tarroni, of Workinvoice, Yasushi Shiina, of the Financial Stability Board and Rein van Helden, of Stibbe.

Panelists discussed the drift of financing of SMEs away from traditional banks and Matteo observed that it was unsurprising that SMEs had moved away from the bank sector, since in Italy it takes on average 65 days for a SME loan to be approved by a traditional bank, whereas a marketplace lender approves the same loan in 6 days. Yasushi noted that the non-bank financial sector has increased significantly since 2009 and that the FSB views the trend towards non-bank financial intermediation as positive and welcome. In absolute percentage terms, non-bank financial intermediation still provides a relatively small share of overall global financing needs but this is growing rapidly. Financial regulators are watching closely and monitoring possible build ups of leverage and maturity mismatch risks in these sectors. Matteo observed...

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