NatWest refuses to credit the UK computer industry

On the same day that Don Cruickshank released a damning report about the UK banking industry, Silicon.com discovered that a major UK bank is refusing small computer hardware manufacturers the ability to accept credit card payments (see: 'NatWest slammed for failing high-tech SMEs' http://www.silicon.com/a36437 )

When small businessman and computer manufacturer, Phil Stilliard, first applied for the ability to accept credit cards with NatWest's Streamline credit arm in 1998, he was turned down because the bank feared fallout from the millennium bug. Stilliard then reapplied in January 2000 - when the millennium bug could no longer be counted as a problem- and was denied Streamline again. This time, the bank admitted that the reason is somewhat more complicated than it first indicated.

NatWest, it seems, has a deep-seated problem with the computer industry. In turning down Stilliard's latest request, the bank wrote: "Please be assured that this is no reflection on you or your particular business. This is a policy decision based on the fact that your business falls into a high risk category due to the possible implications of the Consumer Credit Act."

According to a NatWest spokesman, it is bank policy to deny credit card facilities to businesses in the computer hardware sector.

Stilliard was dumbfounded. Having traded for two and a half years, he is unable to expand his business beyond his local area because he cannot accept credit card payments. "Somebody who wants to buy a computer wants to do so with a credit card, because it's a major expense," he explained. "If they have to pay with a cheque, it's a problem." Ecommerce, of course, is out of the question.

Banks have been criticised before for holding back ecommerce by failing to grant credit card facilities to emerging dot-coms. Even that darling of the stock exchange, Lastminute.com, struggled for over a year to gain credit card facilities as a start-up.

But the news that NatWest pursues a policy almost guaranteed to run computer hardware manufacturers out of business still comes as a shock. Given the potential income from computer hardware and services - and we can point to companies like Compaq, Dell, Gateway, HP and IBM - the lack of interest is amazing.

Even better, NatWest's restriction applies only to small businesses. The bank's spokesman explained: "If Dell were to come to us, then we wouldn't turn them away."

The irony, of course, is that the Dells and Gateways of this world thrived because back when they were small businesses, US banks supported a promising business model, even though the business sector was high risk. By refusing credit facilities to any small computer hardware business, NatWest ensures the bank will never have to worry about having a UK success story of Dell proportions on its books.

Other banks - like Barclays and HSBC - don't draw the same blanket conclusions. A spokesman for HSBC explained that although computer hardware is a high risk category, the bank will look at the individual business before making a decision. Stilliard himself is currently putting in an application with the Royal Bank of Scotland.

Cruickshank's Banking Review Team said that if businesses are being turned away in this blanket manner, then it only goes to show that their criticisms of banking practices are well-founded. But the Department of Trade and Industry - despite repeated claims about the importance of the UK tech sector- says it has no plans to intervene in this matter.

So the advice is this: if you think your business could make billions in the computer industry, steer clear of NatWest. They're not interested.