Magazine article Times Higher Education

Put That Very Nice Pounds 7bn Cushion to Work, Barclays Tells the UK Sector

Magazine article Times Higher Education

Put That Very Nice Pounds 7bn Cushion to Work, Barclays Tells the UK Sector

Article excerpt

'Conservative' client group must invest to continue outstanding performance. John Morgan reports.

UK universities risk falling behind international competitors because nervousness about tuition fee reforms has made them focus on savings instead of investments, according to a senior figure at one of the sector's major bank lenders.

Chris Hearn, head of education at Barclays Corporate, also said in an interview with Times Higher Education that the rumoured sale of the student loan book could make the new undergraduate finance system "a lot more sustainable".

About 40 to 45 per cent of UK universities' bank borrowing comes from Barclays, with two-thirds of universities being clients of the bank.

Barclays' exposure to universities amounts to Pounds 3.7 billion, making the sector a "fairly significant client group", Mr Hearn said.

He described universities' financial performance over the past three years as "outstanding".

"When we as a bank think about universities and the uncertainty that exists in other, similar client groups, it's clear that the business model of the sector is strong: you have demand for places, global brands, the longevity of its client base - all of that makes it a very sound business model," Mr Hearn said.

The sector's "inherently prudent and conservative" approach is a strength, he added, with its short-term cash deposits currently amounting to Pounds 7 billion.

But Mr Hearn also noted "the weakness of (the sector's) prudence. Seven billion pounds is clearly a very nice cushion to absorb any shocks that might come from the changes in student finance. …

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