The most notable change in funding patterns since the financial crisis has been the reduction in bank lending. Between 2000 and 2007, average net lending by banks to UK non-financial corporates was £38 billion per year, but levels have not reached near this figure since.

Initially, much of the reduction in borrowing from banks was reflected in falling corporate leverage. Indeed, non-financial UK corporates were significant net issuers of equity, particularly in 2009. However, the reduction has also been associated with the increased use of other sources of debt, with different firms turning to different markets for non-bank financing.

While total deposits from non-financial corporations have generally risen over the past two years, deposits from corporations in the financial intermediation sectors have fallen as increased risk has scaled back some activity.

Deposits from non-financial corporations rose by 6% between December 2017 and November 2019 from £469.5 billion to £497.6 billion.

Mark Carney, Governor of the Bank of England, has stated that the bank remains keen to champion a data platform to assist SMEs in applying for, and obtaining, credit with a single ‘data passport’. This means that SMEs could easily apply for finance from a multitude of providers at the click of a button.

To maximise this potential and grasp emerging opportunities in the lending market, alternative finance platforms need to embrace the basic tenets of good lending practice to establish their credibility.

This credibility is required not only from the borrower’s perspective to ensure requests receive a fair and robust assessment, but also from investors, so they have the confidence that backed deals have been subject to a rigorous and effective underwriting process.

This Report analyses the UK commercial banking market with a focus on the mid-market and corporate banking sectors. It covers services to non-financial private sector businesses.

A commercial bank is a type of bank and financial intermediary. These banks provide saving accounts, money market accounts, checking accounts and also accept time deposits.

Commercial banks also supply foreign exchange, international banking and trade financing.

Commercial banks provide different types of loans, including secured loans, unsecured loans and mortgage loans. In its role as a financial institution, it provides a variety of services that are helpful for business and general purposes.

Commercial banks make loans to the full spectrum of borrowers, from private individuals up to major corporations and municipal, regional and national government agencies. Commercial banks, including savings banks and credit unions, finance their loan activities by lending out money gathered from the other side of the business – the funds deposited by individuals and firms.

The biggest banks in the world have grown to become complex, multi-market organisations serving a diverse group of customers. In addition to lending services, major commercial banks also offer cash management services, such as money transfers and account reconcilement, asset-based financing and equipment leasing.

Businesses are increasingly demanding more customised products at a lower price point while receiving greater levels of service. The challenges of today’s fragile economy have reduced the flow of capital in the market and require a more in-depth and vigilant approach to risk. The current industry structure may need to adjust to meet changing demands, and allow banks and lenders to deliver profitable results.

Services for small businesses are analysed in Mintel’s Small Business Banking – UK, October 2019 Report.

Market segmentation splits medium- and large-sized businesses. For the purposes of this Report, a medium-sized business is defined as a non-financial, private sector business with an annual turnover of between £1 million and £25 million. Large businesses are defined as those with turnover in excess of £25 million. This is in line with the definition used by the British Bankers’ Association. The term ‘corporate banking’ is used to refer to services provided to large businesses.

This Report uses BBA data to segment the market. This data is collected from a select group of major high-street banks. It does not cover the entire market. The following is a list of the banks that the BBA includes in this group:

Santander UK Group:

• Santander UK (including retail deposits of Bradford & Bingley from 2008)

• Abbey National Treasury Services plc

• Cater Allen

• Alliance & Leicester plc (from 2008)

Barclays Group:

• Barclays Bank PLC

• Barclays Bank Trust Company Ltd

• Bradford & Bingley plc (up to and including 2009)

Lloyds Banking Group:

• Bank of Scotland (from 2009)

• Lloyds TSB Bank Plc (from 2009)

• AMC Bank Ltd (from 2009)

• Lloyds TSB Private Banking Ltd (from 2009)

• Lloyds TSB Scotland plc (from 2009)

• Scottish Widows Bank plc (from 2009)

HSBC Bank Group:

• HSBC Bank plc

• HSBC Trust Company (UK) Ltd

• Marks & Spencer Financial Services (from 2011)

Virgin Money Group:

• Virgin Money

The Royal Bank of Scotland Group:

• The Royal Bank of Scotland plc

• Adam and Company plc

• Coutts & Co

• National Westminster Bank PLC

• Royal Bank of Scotland NV (from 2011)

• Ulster Bank Ltd

• Ulster Bank Ireland Ltd

It is not possible to profile all banks offering commercial banking services in a report of this type. This Report is not a directory of industry participants and the company profiles are a cross sample rather than the largest industry participants.

All market and industry statistics up to 2019 are quoted at actual prices for the year.

Forecasts for 2020 onwards are made at 2019 prices.

The term one billion refers to one thousand million.

Some numbers may not sum due to rounding.