How a banker might assess a business requesting funding for a transaction

Continuing one of the MD2MD’s meeting themes of “how businesses are viewed by external financial and commercial professionals”, we were delighted to welcome Steve Bateman, Senior Business Development Manager of The Co-operative Bank Corporate Banking to talk to the group of business owners and managing directors about ‘how a banker might assess a lending proposition’.

Steve started by introducing “CAMPARI & ICE” to the members; an acronym the bank use when assessing applications.

C    character
A    ability
M    means
P    purpose
A    amount
R    repayment
I      insurance


I     interest
C   commission
E    extras

He explained in some detail how he might go about considering the business risks; not only looking at a company’s financial statements, but also looking at its market position and management. A bank will also consider the industry as a whole; its growth, decline, market share and the clients strategic positioning within that.

When assessing financial statements, amongst others the focus will be on revenues, costs and profits for margin trends, cash-flow for any pressure signs, assets and their potential value and any current debts or liabilities.

Steve emphasised that there is no single measure to show whether a company is a good credit risk or not. It is important for lenders to consider non-financial traits as much as financials and that common sense questioning and reasoning is essential; as is customer transparency.

He did, however, point out that presentation can add or detract from a borrowing request and as a result some companies use professional advisors.

The group came away from the meeting with a greater understanding of banks and what they look for, and their basic credit assessments.

Written by Bob Bradley, founder of MD2MD.