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Vaughan Gething MS, Minister for Economy

First published:
12 July 2023
Last updated:

Our commitment to support the development of a Community Bank is motivated by the belief that as a nation, communities and individuals we will benefit from access to a financial organisation serving the communities of Wales.  One that is owned by members in Wales, where key decision-making happens in Wales, and that prioritises a service in both languages and in places accessible to the people of Wales.

The Welsh Government does not hold devolved powers to directly deliver a Community Bank. Therefore, our approach has been to work with the sector and related expertise, shaping a vision for future community bank delivery and acting as a catalyst to change. We have supported the work of Cambria Cydfuddiannol Limited (CCL), a co-operative society that was established to explore the feasibility of establishing a Community Bank for Wales, and that led in 2021, to Monmouthshire Building Society (MBS)  stepping forward  with a vision and commitment to  establishing a community banking offer.

In my February statement I reported that Monmouthshire Building Society was considering its approach and the related timelines for phased delivery, in the context of prevailing economic uncertainty. 

I met with the CEO of MBS and a representative of their Board earlier this week and was advised that, in light of the now changed market conditions, MBS will be undertaking a strategic review of their approach to the delivery of community banking services. Economic conditions are impacting the mortgage market and that impact will extend beyond the short-term. As such, MBS has confirmed that they do not believe the outlook is right for launching an economically viable community bank offer at this time.

Consequently, MBS has confirmed it is standing down its current project, with the form of any future community banking offer to be informed by their forthcoming review. To this end, it is for MBS to inform all partners regarding their future approach and associated timeframes once that work is completed. MBS do not expect this to be within this Senedd Term.

Whilst this news is clearly disappointing, MBS is an independent and commercial organisation, who has invested considerably in its work on community banking to date. MBS has received no Welsh Government funding, and it is for them to form their judgements on this matter and proceed accordingly. 

Finance is a highly regulated sector and any organisation bringing forward new proposals is subject to significant scrutiny from both the Prudential Regulation Authority and the Financial Conduct Authority.  Indeed, despite many attempts by different organisations across the UK to establish a community bank, none has yet succeeded.

Our vision remains unchanged – that is for community banking services to develop in Wales, adding value and choice in the financial ecosystem and supporting community wealth building.  Welsh Government, therefore, remains open to working constructively with the sector to explore options and opportunities and we will continue to engage actively with CCL to this end.

Aspirations for a Community Bank have, understandably, been fuelled by bank closures and the broader set of challenges and factors impacting the vitality of high streets and communities. While we believe community banking has a role to play in addressing these challenges, there is no single panacea. While new initiatives such as banking hubs offer some solace and prospect for face-to-face interaction between banks and communities, the reality is that these are only now emerging slowly and their birth is already far too late for many who feel inconvenienced, let down or left behind.  The UK Government’s Financial Services and Markets Bill may lead to legislation which prevents flight of the ‘last bank in town’ – but this is a backstop measure only. We don’t believe such a backstop measure is acceptable.

The Welsh Government is committed to working with public, private and third sector partners to progress forward-looking solutions and approaches to these very complex challenges.

I welcome the actions of Link who are working with Banks to deliver new banking Hubs linked to the Post Office network, and for our part we are advocating with them to include Credit Unions within future Hubs, so their offer extends to community credit and lending facilities.

The Welsh Government continues to support 13 projects with Credit Unions, who play a vital role in the financial lives of their members and communities, this includes supporting them to extend their reach into communities through hubs and outreach locations.

The Welsh Government’s digital inclusion programme, Digital Communities Wales, is already working with organisations across Wales to equip people with the motivation, access, skills and confidence to engage with an increasingly digital world, which includes online banking services, based on their needs.  

To support a well informed and robust appraisal of needs in a fast-changing context, and in line with the principles of the Well Being of Future Generations Act, I am working with the Minister or Social Justice and Chief Whip to build and coordinate the holistic evidence base in Wales that is vital to inform future action by government and others.

The road toward community banking in Wales, while not straight forward, is not at an end. We continue to work with CCL and key institutions and bodies in Wales to explore all options toward creating a community bank in Wales aligned with our aspirations and the needs of communities and businesses.