Member Article

We could be first to set-up regional bank

WHAT do we want? A regional bank! When do we want it? Now!

When it comes to economic development in the North East some things are blindingly obvious and one of those is establishing a regional bank. It would help to fund much-needed development, addressing our economic twins of evil, low demand and shortage of finance.

I’m a big fan of the idea and was interested to attend last week’s conference on The Future for Regional Banks, held at the Baltic in Gateshead.

Greg Clark, financial secretary to the Treasury, spoke in support of regional banks and is clearly eager to stop political and economic power seeping away from the regions through centralisation which results in loss of the importance of place.

Economic growth happens “in places” and there must be help to unleash the area’s potential. He went on to extol our successes, with this region being the only one with a positive balance of trade in exports in the UK and second only to Greater Manchester for inward investment. Government policy seeks to promote competition, including the establishment of new banks and making capital and liquidity more proportionate, and Mr Clark emphasised the need for a North East regional bank.

The conference heard a raft of speakers confirm their backing. We heard from Victoria Raffé, Financial Conduct Authority, and Sam Woods, of the Prudential Regulatory Authority, about the key issues needed to establish a regional bank; and from Metro Bank founder Anthony Thomson on his experiences setting up the bank.

Dr Thomas Keidel, director of the Deutscher Sparkassen und Giroverband, explained the virtues of the many local German banks that make up 75% of banking business, compared to the 75% of business carried out by the six big banks in the UK. He emphasised that the German local bank carries out business it understands with people it knows and has not exposed its commercial customers during the financial crisis.

Jeremy Middleton, chairman of the North East Local Enterprise Partnership Investment Panel and of Middleton Enterprises, expressed the opinion that there is much business for a regional bank to carry out. Meanwhile Sarah Green, director North East CBI, explained that any new regional bank will need to give confidence to business by being different and meeting the particular business needs and circumstances in the region.

The consensus was that a regional bank will be more in tune with our needs and can exercise the vision needed as well as having a social responsibility. Crucially, the director would live in the community. I like the German model, which helps to drive economic regeneration, provided it is protected from consolidation with other banks to prevent the erosion into a branch economy from which we have suffered.

There is clearly a government will to set up regional banks, Her Majesty’s Opposition has called for regional banks aimed at SMEs, those running similar institutions elsewhere believe they will work and the Archbishop of Canterbury Justin Welby is a fan of them.

So come on private as well as public sector regional leaders, what is stopping the North East being the first in the country to set one up?

This was posted in Bdaily's Members' News section by Kevan Carrick .