North Wales Assembly Member Mark Isherwood has questioned the First Minister this week over the feasibility of a Community Bank in Wales, and stated that instead of establishing a Community Bank, the Welsh Government would be better to focus on supporting local post offices to deliver banking facilities and working with existing retail Banks and Building Societies to co-deliver local branch services.
Mr Isherwood, a qualified Banker who worked in a mutual Building Society prior to becoming an Assembly Member, challenged Mark Drakeford in the Welsh Parliament yesterday when asking what progress has been made to establish a Community Bank in Wales.
He said:
“I note the Cross Party Group (on Co-operatives and Mutuals) today referred to the development of the group working in Banc Cambria to take forward your proposals for a Community Bank. Of course, these run in parallel to the development of the Post Office Banking Framework agreement with 28 UK banks to enable customers on the high street to access wider banking services, and the proposals two years ago from Responsible Finance Wales, for groups to work together to develop a Community Bank model. And, of course, I used to work in one of the forebears of the Community Banks—one of the mutual Building Societies.
“However, when I raised with the First Minister in 2010 the risk management and capital adequacy requirements and regulation a new Bank would have to comply with, which an established bank partner would not, the then First Minister agreed that setting up a new bank can be, quote, 'a costly and protracted business if you start from scratch’ and ‘using the expertise that is already in the sector to develop a social model of banking makes sense'.
“What discussion have you and your colleagues therefore had, in consultation with consumer groups and industry experts, regarding the feasibility of a Community Bank in Wales reflecting those core banking needs, regulations and principles?”
In his response, the First Minister said:
“Mr Isherwood is quite right to say that the business of setting up a new bank has significant regulatory hurdles to overcome and that it can be a protracted business. But that is why we are working with the Community Savings Bank Association. And in that way, the landscape has changed since 2010, because the Community Savings Bank Association, coming out of work carried out by the Royal Society of Arts, has financed itself and led preparation of constitutional documents, IT systems, branch designs, payment system links, product specifications, and, critically, banking licence application documents. So, there is now a great deal more work that has been done by a group of experts that gives us the foundation for what Banc Cambria can do here in Wales”.
Speaking outside the Chamber, Mr Isherwood added:
“Although Mark Drakeford’s leadership manifesto pledged to create a new ‘Community Bank of Wales’ and ‘Banc Cambria’ has been formed as a co-operative society to deliver this, a prudent First Minister would instead be working with the Post Office to support our local Post Office Branches and ensure convenient, local banking facilities for individuals and businesses in communities across Wales, especially when the last bank branch has closed. A prudent First Minister would instead be working with our Credit Unions where Credit Unions can’t. Above all, a prudent First Minister would instead be working with industry experts and existing retail Banks and Building Societies to co-deliver sustainable local branch services at minimum public cost and maximum reach”.
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