Calls for a new bank to help small firms

Businesses say they urgently need better access to finance Credit: Owen Humphreys/PA

Welsh Conservatives have outlined plans for a network of government-owned banks to speed up lending to small and medium-sized businesses in order for them to boost the economy and create jobs.

The party set out its proposals for a new organisation, 'Invest Wales,' to replace Finance Wales which is the current investment bank subsidiary of the Welsh Government.

This morning's launch, at the historic Coal Exchange building in Cardiff, follows a call at the weekend by Plaid Cymru for the creation of a Bank of Wales and the announcement of a review into sources of lending launched last week by the Welsh Government.

Businesses have repeatedly said that one of the biggest problems they face in expanding and employing people is the difficulty of getting finance from mainstream banks.

Welsh Conservative researchers have been looking at similar lending institutions in other parts of Europe and North America.

Their proposals involve replacing Finance Wales with a new body, Invest Wales which would be independent of but accountable to the Welsh Government. This would oversee six regional banks which in turn would set up branches at a local level in conjunction with High Street banks.

The aim is to make it easier for small businesses to access loans of taxpayers' money ranging from £1000 to £1m.

Opposition leader Andrew RT Davies described the plan as a 'ready-to-go policy' which could be implemented more quickly than whatever is recommended by the Welsh Government's review into lending to small businesses.

Meanwhile Plaid Cymru has made a similar call for a Welsh Government-owned 'business bank' to replace Finance Wales.

Plaid's organisation would be called 'the Bank of Wales' - a name which used to belong a commercial lending institution in the 1970s and 80s. The party is also suggesting that the bank should operate on a regional basis.

Economy spokesperson Alun Ffred Jones said:

The Welsh Government insists it is dealing with the question of lending to small businesses and that the function of lending to small businesses is already being carried out by Finance Wales which has invested more than £238m in over 2800 companies since 200.

A spokesman also highlighted an independent review launched last week and to be led by Professor Dylan Jones Evans. The review will look at whether or not High Street Banks are meeting the needs of small businesses and also 'examine other potential sources of finance.'