Barclays enlists hi-tech helper to vet borrowers

Barclays has completed the installation of a new computerised corporate lending system that it claims will prevent a repeat of the sudden catastrophic emergence of bad debts that hit the bank after the last recession.

The system, called Lending Advisor (sic), now covers 1,500 managers in 350 branches and regional offices and 60,000 business customers ranging in turnover from pounds 500,000 to large companies, though not the really big multinationals.

David Weymouth, director of corporate services, said: "In the late 1980s nobody knew they were hitting an iceberg until they smashed into it and started to sink. With this you can see the iceberg much earlier. There is an early warning capability in this that is very important."

The system helps bank managers assess the creditworthiness of their customers by loading financial information about the company on to the computer, which compares the business to its peers and flags possible areas of concern thrown up by the figures.

It also projects the company's financial performance and shows the impact of changing business plans on cash needs.

Managers input their own views on the company, the industry in which it operates, its management, their performance records and even their ethics. The system highlights any conflicts between this judgemental information and the financial data.

The immediate objective of the system is to speed up lending decisions to companies and make them more consistent around the bank.

Mr Weymouth denied that the computer system automated corporate lending in the same way as credit scoring for personal loans. Decisions are still taken by managers and the computer does not make recommendations about whether to make a loan, how much it should cost or what security should be put up.

But because of the improvements in credit analysis brought in by the new system, many more decisions can be taken at branch and regional office level than in the past.

Mr Weymouth said: "Managers will have considerably more autonomy so they will be allowed to make faster decisions." Where the computer analysis shows borrowers are in the good risk to medium risk range, then decisions will be taken at lower levels in the bank.