Wednesday, 31 July 2013


If we are serious about developing small to medium sized enterprises (SMES) then there is a need for a new business bank (for Wales) to help small and medium sized businesses grow to reach their potential. At the moment (and sadly probably for the foreseeable future) many of our small and medium sized enterprises are  being denied credit by banks and this is smothering potential economic growth and the expansion of our private sector. A Bank of Wales, could potentially run in the same way that the Sparkasse and Landesbanken (in Germany) which operate on a strictly regional basis and aim to support local industries and businesses.

This is not a particularly new or radical idea, it may well be one who’s moment has arrived. We should remember that historically we once had a network of local banks focused on the drovers who moved livestock to sell in the larger export market. Local banks were killed off in the last quarter of the nineteenth and most of the twentieth century’s as financial services were increasingly amalgamated, centralised and standardised (in London). This did little for local entrepreneurs, business people and has done little for ordinary bank customers as banks have been increasingly run to serve their own needs rather than those of the people. 

As has been previously noted elsewhere (by 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. 

During it’s relatively short life, what was known in some circles as the Plaid driven One Wales Government made real efforts 
to act differently when it came to economic development and to provide support for SMEs. They 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 often with more flexible working conditions.

Since May 2011 the Labour in Wales government has simply dusted off the old and unsuccessful Welsh office model of economic development. Simply attracting branch factory operations of a relative short term duration does not help develop or sustain 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 for longer. So the concept of new Bank of Wales business bank to help small and medium sized businesses is one realistic way of enabling SME’s to grow and create wealth in our communities, not to mention developing and sustaining longer term employment possibilities.

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