Some of the liquidity in the development market has 'definitely disappeared', claims OakNorth's Ben Barbanel



In a filmed interview with Development Finance Today, Ben Barbanel, head of debt finance at OakNorth Bank, revealed that since the start of lockdown, it has approved around £180m of development facilities, but believes that some of the liquidity in the wider market has departed.

DFT asked Ben what its development finance pipeline looks like going forward, and whether the bank’s appetite has changed as a result of Covid-19.

“We are definitely trying to analyse risk deeper and harder,” he answered.

“We’ve developed our own specific set of sensitivities that we apply … on a proprietary basis, based on data we have of prior cycles and recessionary periods, so we apply those sensitivities to all new deals we are doing."

He told DFT that the lender had continued to complete on deals, and that the pipeline was “pretty strong”.

“If I am honest, some of the liquidity in the market has definitely disappeared,” claimed Ben.

He believed that this was an “obvious factor” considering clearing banks are typically focusing on existing portfolios during this time and are therefore doing less new business.

“…I think some of the alternative lenders that had perhaps wholesale funding lines and fund structures may well have problems with liquidity from here on in,” he added.

“For us, being a regulated bank and having a strong, loyal deposit base, is going to stand us in excellent stead, and we’re not reliant on investors to fund on deals that they’ve committed to some time ago.”

OakNorth was accredited by the British Business Bank for the Coronavirus Large Business Interruption Loan Scheme (CLBILS) earlier this month, and the Coronavirus Business Interruption Loan Scheme (CBILS) in April.

This week, the bank announced it had completed a £2.3m loan to Norfolk residential developer, Dewing Properties, through the CBILS.

To date, OakNorth has approved £64m through the government-backed schemes, which Ben estimates around two-thirds of which have gone to developers.

“I think the government’s response to this crisis has been pretty phenomenal,” he stated.

“[The schemes] have really helped property entrepreneurs carry on with developments that may have otherwise ceased.”

The full interview can be viewed below.


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