04 November 2008

Banking on Imaginary Assets

Haven't banks learned *anything*?

In 2006, the Bank of Communications Beijing Branch began offering loans to Chinese SMEs secured against IP assets. Since then 37 companies have borrowed a total of over 400 million yuan (around $58.5 million) in 44 separate deals. And not one has defaulted.

Yet.

When banks start lending money against IP assets, it has to be a pretty positive sign. I know that banks have a pretty poor reputation these days, but they are not going to make cash available to companies if they do not think that they have a very good chance of getting it back; or, if they do not, that they can recover the money in other ways.

Er, because banks never make mistakes, and are never motivated by blind greed? "A pretty positive sign"? I don't think so....

2 comments:

zoobab said...

To clarify what "IP" means in the article of IAM:

"What is also noteworthy is that most of the money in these 44 deals was secured against trademarks and copyrights, not patents."

glyn moody said...

Thanks - but they're still imaginary in the sense of non-physical, rather like financial derivatives....