Study Investigates Potential of State-Owned Commercial Bank for Wales

Posted on 6 February, 2014 by Cliff Goodwin

The Welsh Economy Minister Edwina Hart has ordered a viability study into the setting up and operation of a development bank to support the country’s businesses.

Edwina Hart AM

Edwina Hart AM

A development bank for Wales was proposed in a review last year by the economist Dylan Jones-Evans. The minister has decided to explore its potential following continued criticism of the performance and policies of the Welsh government’s investment body Finance Wales which the report branded as “not fit for purpose”.

Any new bank would take over the responsibilities of Finance Wales — set up in 2001 to lend money to or buy shares in Welsh companies — and which last year’s review said was too focused on generating profits rather than helping businesses and developing the Welsh economy. It also highlighted alleged confusion over Finance Wales’s exact role and concerns about the cost of loans to small firms.

The strongest criticism against the finance agency concerns its use of European cash and its failure to generate jobs. The £150m fund draws money from the EU and the Welsh government and was initially charged with creating 15,000 jobs during its six year life. This was later reduced during the recession to 10,070.

With a little over 18 months left — the fund will be wound up in September next year — the latest figures show that just 1,991 jobs have been created, around 20 per cent of its target, with most of the fund invested.

Mrs Hart has now confirmed she has asked Professor Jones-Evans, an academic at the University of the West of England, to examine the concept of a Welsh commercial bank in more depth and “explore the potential mission, role and operations that such an organisation could undertake, the legal and state aid framework required to establish and operate, the necessary skills, experience and costs, and the relative risks and rewards”.

The possibility of a state-owned bank dedicated to financing and supporting Welsh enterprises received the immediate backing of the Federation of Small Businesses. Its Welsh spokesman, Iestyn Davies said the professor’s report had “shone a stark light” on Finance Wales and the inflated interest rates it has been charging our members.

“We are very much in favour of reform to Finance Wales to ensure that it provides affordable loans to small business and is properly accountable with a far higher degree of transparency and opportunity for scrutiny than exists at present,” he added. “The notion of a Development Bank of Wales is worthy of serious consideration.”

Rhun ap Iorwerth is Plaid Cymru’s economy spokesman. “Access to finance has consistently been cited as a barrier to growth for many small and medium size enterprises and much more needs to be done to tackle this problem,” he said. “A Welsh public bank, owned by the public but at arm’s length from government, to lend money to small businesses at competitive rates and to offer finance services, is the boost that Welsh businesses need.”

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Recent Posts

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants

BA cuts 12,000 jobs, unions hit back

Media Streaming Service See Record Subscriptions