Cash-strapped consumers are not the only ones that are finding out that banks have thought of all new fees to charge them, even well heeled private equity firms are finding themselves with new charges when their statement comes in the mail.
With buyout shops not doing much business due to the credit crisis,
banks are no longer looking at the LBO firms as prized clients and are
starting to charge more for services that were formerly cheap as long
as the underwriting fees came rolling in. The Financial Times writes:
Lenders have infuriated some private equity bosses by announcing as
much as 10-fold increases in the annual cost of renewing their
short-term overdraft facilities....One mid-market buy-out house, based
in London's Mayfair, has seen the annual renewal fee for its £40m
overdraft facility increase from £50,000 to £500,000.
The lending facilities are used by the LBO firms to cover the cost of
investments, while they wait for the money to come in after a capital
call. Other PE firms have seen the interest rates on their overdraft
lines double, causing anger and consternation.
The head of the Mayfair-based buyout house told the FT: "I am
absolutely apoplectic about this. The bank are basically sticking two
fingers up to us. We won't forget about this."
While bankers will surely have a hard time smoothing ruffled feathers
when the recession is over, at the moment it appears the bankers are
looking to their own welfare first. -
George White
See FT story
