A GROUNDBREAKING scheme to use pension funds from Cambridgeshire public services to support and grow local small businesses has been launched.
The newly created Cambridge and Counties Bank is jointly owned by the Cambridgeshire Local Government Pension Fund and Trinity Hall, a College of the University of Cambridge.
The move is part of the County Council’s and Trinity Hall’s commitment to get the best return on their investment whilst also supporting the local community.
Cambridge and Counties Bank has a strong management team led by chief executive Gary Wilkinson who has held a number of senior roles in the banking and building society sectors.
Assets from a former bank have been bought for the new venture, which will concentrate on secured lending to SME’s.
Investment in the bank brings good returns for the pension fund, which has more than 170 member organisations, reducing any burden on the tax payer so money can be spent on frontline services.
At the same time it shows that Cambridgeshire is open for business and will provide financial support to help small and medium businesses grow and create jobs at a time when it is harder to secure funding.
Analysis of industry data by Cambridge and Counties Bank reveals that in the second half of 2011, over 60,000 loan and overdraft applications from SMEs worth as much as £3 billion, were rejected by banks. New research from the bank reveals that 47% of businesses believe that their relationship with their main business bank is only average or bad.
In order to be issued with a banking licence, Cambridge and Counties Bank has been formally authorised by the FSA. In addition, each of the directors of the bank have been authorized by the FSA as an approved person to carry out the controlled function of a board director.
Nick Clarke, Cambridgeshire County Council Leader and non-executive director of Cambridge and Counties Bank said: “The new bank will give local SMEs a real boost and the chance to grow, at a time when it’s proving hard to secure funding even for viable business propositions. This venture will not only produce a good return for the pension fund, but also mean that money from public services pensions is being used to support the economy, create jobs and improve the quality of life for our communities. The return on investment will reduce the burden on local taxpayers and leave more money available for frontline services. The bank has been properly assessed and is a very good investment. I am really pleased that we are taking a lead here and investing with Trinity Hall in this exciting opportunity.”
Paul ffolkes Davis, Bursar and Steward, Trinity Hall, Cambridge said: “We regard Cambridge and Counties Bank as an unprecedented opportunity to marry a strong investment promising good returns with support for small businesses at a time when they need it most. While the traditional high street banks are pre-occupied with their legacy problems, which are having a negative impact on their lending, by contrast Cambridge and Counties Bank has no past and is looking forward to a successful future. While the outlook for higher education funding looks ever more challenging, this investment is also intended to strengthen the College’s endowment returns in order to secure our world-class teaching and research for coming generations of Cambridge students.”
Mark Hoban, Financial Secretary to the Treasury, welcomed the announcement, saying: “I’m pleased to support a new bank that will focus on lending to the SMEs that make up such a vital part of the UK economy. The Government remains committed to fostering more diversity in the banking sector, so we need new banks to enter the market to provide consumers and businesses with greater choice.”
Cambridge and Counties Bank will provide SMEs with loans secured against commercial property as well as a highly competitive deposit account. In addition to this, it will also offer secured pension scheme lending, and has plans to launch professions financing, as well as other competitive savings accounts into both the retail and non-retail sectors.
The bank feels that now is an opportune time to launch, because many SMEs are finding it difficult to secure finance. Gary Wilkinson, Chief Executive, Cambridge and Counties Bank said: “We have been able to build a very strong and experienced management team, and launch at a time when many robust SMEs are finding it difficult to secure finance. There is also a real need for increased competition in the banking sector.
“By placing a significant focus on developing a partnership type relationship with our clients through being easy to do business with and by focusing on plain English and transparency, we hope to have a significant impact on our markets.”