Bigger banks 'better for secure loans'

Big banks are better able to offer sub-prime secure loans to customers than their smaller competitors, the British Bankers' Association (BBA) has said.

It states that with mergers creating much larger banks than ever before, they are more likely to be "sympathetic".

"Increased size…means that you have the ability to provide not exactly low cost loans, but loans at a consistent market rate which aren't quite as market-sensitive because you've got a better capitalisation," a BBA spokeswoman said of secured loans.

She stated that bigger banks are more likely to have a capitalised loan book that means that - as long as customers keep their bank informed of any difficulties - the bank is better placed to offer support.

In contrast, she said that smaller firms will have undercapitalised loan books, which means that "they haven't got anywhere to fall back on so they themselves put the screws on you".

Secured loans rose in the last quarter of 2006 by £2.5 billion, hitting £14.5 billion as more people used these to obtain money.

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