A BANK FOR WALES

The call from Plaid for a new business bank for Wales to help small and medium sized businesses grow to reach their potential is a welcome one. At present many of our small and medium sized enterprises are  being denied credit by banks and this is stifling potential economic growth and the expansion of the private sector in Wales. Plaid’s economic commission is to investigate proposals for a Bank of Wales, to potentially run in the same way that the Sparkasse and Landesbanken (in Germany) which operate on a strictly regional basis to support local industries.

As noted elsewhere by the oggybloggyogwr; Germany has a unique network of state-owned, federal state-based (Länder) banks called Landesbanken. They offer a mix of commercial and private banking services and employ tens of thousands of people across Germany. They're primarily a source of credit and bonds for both public sector and private companies within their respective states. So the "big bank money" tends to be cycled within the state. That's probably one reason why economic disparities between regions aren't as pronounced within parts of the former West Germany as they are in a unitary state like the UK or France. 

Now to be brutally honest none of this is not a particularly new or radical idea, but, it may be a timely one, historically we once had a network of local banks focused on the drovers who moved livestock to sell in the larger export market. These were killed off as through the last quarter of the nineteenth and most of the twentieth century’s financial services were increasingly amalgamated, centralised and  standardised in London. The process did little for local entrepreneurs, business people and (certainly latterly) has done little for ordinary bank customers as banks have been increasingly run to serve their own needs rather than those of the people.

Alun Ffred Jones AM, Plaid Shadow Economy minister said:

“Plaid Cymru is ambitious for Wales – we want to see more business and economic growth throughout the country, creating jobs and improving skills.

“However, what I hear from businesses up and down Wales, and supported by surveys from the FSB and other business representatives, is that small businesses are still finding it difficult to get funding to help with their cashflow and to develop their future growth plans.

“It isn’t a problem which is unique to Wales, and the problem is commonly recognised, but the various credit proposals from Westminster haven’t provided the solution.

“In fact, all too often, we hear stories from business owners that have had to use their credit card to finance their growth plans because distant banks are cutting back on capital and unwilling to commit to plans to improve Wales.

“Private sector growth is vital to our economic recovery.

“Wales therefore needs to have a bank which operates on similar lines to the German Sparkasse and Landesbanken that operate on a geographical basis, developing special expertise in the local industries so that they are better equipped to make investment decisions.

“The Bank of Wales name was bought up by the Bank of Scotland and merged out of existence. It would be good if we could have that name back to use to benefit Wales, rather than it being left in a drawer, and being no good to anybody.

“Plaid Cymru’s economic commission will be investigating how we can make the banking system work better for Welsh business.”

During it’s relatively short life, what was known in some circles (to the intense irritation of Labour in Wales representatives) as the Plaid driven One Wales Government made significant efforts to act differently when it came to economic development and support for small to medium sized enterprises (SMEs). SMEs can and should play a significant role at the heart of our communities; they create wealth and sustainable medium to long term employment opportunities for local people.

Sadly since May 2011 the Labour in Wales minority government appears to have resurrected the old brain dead Welsh office model of economic development. Attracting branch factory operations of a relative short term duration does not help develop our economy. More than ever we really do need to think differently and focus economic development priorities on smaller local businesses who will be rooted in our communities and offer more flexible employment opportunities.

As has been noted elsewhere profits and investments made by home grown locally rooted businesses tend to stay within the communities where they are based. So Plaid’s concept of new Bank of Wales business bank to help small and medium sized businesses should be warmly welcomed, as this is one realistic way of putting wealth into our communities, not to mention developing and sustaining longer term employment possibilities.