Metro Bank PLC CEO Dan Frumkin has warned that a significant proportion of UK borrowers who have taken out coronavirus support loans will eventually default, but said the UK will see more startups over the course of time. next year than at any time in its history.

Metro has made more than 30,000 government-backed bounce back loans to small businesses totaling over £ 1.1 billion, or nearly 10% of its loan portfolio.

Speaking to S&P Global Market Intelligence, Frumkin said it was inevitable that not all of them would be reimbursed.

Metro Bank CEO Dan Frumkin
Source: Metro Bank

“Even if 20% of these loans go bad, that means 80% of these companies are there to hire people,” he said. “The 13th month is going to be an interesting time: it’s the time when people have to start repaying [Bounce Back Loan Scheme loans], and we expect there will be a significant number of defaults. “

However, he said there would likely be a pickup in economic activity, too.

“We are very focused on SMEs and I think we are going to see more startups over the next 12 months than we have seen at any time in UK history,” he said. -he declares.

UK Finance, which represents the banks, plans to create a debt collection entity to be used by all UK banks facing the collection of outstanding loans related to the coronavirus. Frumkin supports the idea.

“[We] need a collection engine that will treat people fairly and consistently. The best way to do that is to create a collect function which is a bit of a utility where we put all of our loans together and go from there, ”he said.

Watch the whole interview.

This report is based on an interview for S&P Global’s Banking Horizons Europe 2020 conference on October 1, 2020. For more and conference information, click on here.