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Cabinet minister hears call in Winchester for 'local' banks
A CABINET minister visited Winchester to discuss the future of UK banking and the growing role for 'local' banks.
Secretary of State for Business, Skills and Innovation Dr Vince Cable said local banks were needed across the country to revitalise the sector following the recession.
He was making a speech at the second European Conference on Banking and the Economy (ECOBATE) 2013, held at the Guildhall on Wednesday.
Dr Cable said: “The consequences for the UK have been catastrophic and we are still hanging in there. We suffered the economic equivalent of a heart attack and heart attacks have long term consequences. We are still on a drip feed of steroids.”
He said the big four banks – Barclays, Lloyds, HSBC and RBS, are too dominant and were currently avoiding lending money to smaller firms because they were under pressure to increase capital and reduce risks.
Dr Cable added: “We have a massive problem due to collapsed banks and an absence of local banks. There’s a vacuum to fill and new ideas and initiatives is what we are looking for.”
But he said there were positives such as new banks like Metro Bank and Handelsbanken, more online lending to entrepreneurs and government plans to fund new banks to fill a gap in the market.
He added the large banks were doing more to keep local communities involved.
Dr Cable said: “We are demanding in government that banks start providing information to borough level so we know what they are doing, where and how we can trace weaknesses.”
Earlier in the day Prof Richard Werner, director of the centre for banking, finance and sustainable development at the University of Southampton, said a local bank was what Hampshire needed to galvanise the economy.
He said: “Local banks are a place for people to save money in a way that benefits the local economy. Local banks can lend money to small and medium enterprises and boost the local economy, with profits reinvested in local projects.
“It’s clear growth would be greater with a local bank in Hampshire. We would have more employment, higher standards of living and increased tax revenue. It’s a win-win situation.”
Alex Templeton, director of Local First Community Interest Company (CIC) Winchester, added local banks could help set up efficient energy projects to cut carbon emissions, as proven in Germany where local banks are prevalent.
He said: “Local banks will dramatically increase the number of energy projects which will increase efficiency and cut emissions.
“Councils are being asked to do just as much as always but with less money. The German example shows how local banks establish strong local economies and deliver long term benefits to communities.”
The conference was sponsored by Hampshire County Council, Winchester City Council, Southampton and Winchester universities and the Bank of England.