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Instead, it will be bundled into Sainsbury's Bank, which can raise deposits to finance the loans cheaply, albeit only after a £100m reinforcement of the capital buffers.
For a loan of around €300,000, a bank's processing cost is far more than the risk premium it can earn, says Mr Reich.His solution is a Kreditfabrik (loan factory), for processing standardised loans cheaply on behalf of many banks.
North American banks have a hard time making a profit on loans of less than$2 million or so, leaving an opening for SmartBiz Loans which offers software to banks to help them do Small Business Administration SBAA) loans cheaply.
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Now, Kraft should be able to refinance the bridge loans more cheaply than it could have hoped back in September.
JPMorgan, the nation's largest bank, figured that OnDeck could offer the loans more cheaply and quickly than if the bank processed them internally.
As long as banks do not offer loans absurdly cheaply, they will avoid "adverse selection" of customers, says Aditya Puri, who heads HDFC Bank.Default rates on bank retail loans, at 2.5%, are not yet alarming.
On Friday, the central bank scrapped the floor on lending rates, freeing banks to issue loans as cheaply as they wished, a modest development that pointed to the challenges ahead.
These terms were dictated by Merkel, who feared that not involving the IMF or making loans available cheaply could expose her to a challenge in Germany's constitutional court.
According to Dutch economist Enrico Perotti, banks are able to fund their loans much more cheaply than any other industry because they offer "liquidity on demand".
Anne Thomas, from Inverness, found commercial loans were available more cheaply elsewhere.
Before the credit crunch, loans could be refinanced cheaply, but now EMI is struggling to meet its debt repayments in the wake of the severe economic downturn.
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