The question is not whether SMEs are risky but whether risky SMEs pose a threat to banks. They don´t!

Sir, Patrick Jenkins, on the issue of the SME not getting sufficient access to bank credit writes: “Compounding is the reality of global capital regulations which makes it far more costly to lend to smaller businesses. Bankers say a typical SME loan may absorb $5 of capital for every $100 of loan, compared with about $1.50 for an average mortgage”, “Policy makers need to refresh their approach to SMEs” November 26.

What “realities of global capital regulations” is he talking about? Those are not God given realities, those are regulations made by human fallible regulators and, if these had been forcefully questioned, among other by your journalists, these could have been changed years ago.

After so many letters over so many years I have written to you, and Jenkins, how come it is only now that Your Banking Editor acknowledges that “Global regulators should look again at the system of risk weighting ascribed to SME lending”? And why did it take a “Bundesbank research paper…convinced that SME default data are not as bad as everyone thinks” for him to do that?

And besides, that is not even important. The real question to be answered by bank regulators is not whether the SMEs are risky or not, but whether the SMEs ever pose a threat to banks? The answer to that is of course they do not, precisely because SMEs are perceived as risky.