Food, Farming and Countryside Commission

Why we need regional stakeholder banks

By Tony Greenham


The Community Savings Bank Association advocates independent, local banks working for, controlled by, and answerable to their customers, and South West Mutual, serving Cornwall, Devon, Somerset and Dorset, is their first.

The UK’s banking industry is still dominated by a handful of giants. Large-scale and standardised ‘tick-box’ systems can bring great advantages for some banking needs, but for many communities it falls well short. Healthy banking systems, like healthy eco-systems, need diversity.

Most countries outside the UK have a mix of banks including regional banks, local public savings banks and cooperative banks owned by their customers. Europe has 3,135 cooperative banks with 80.5 million members and 209 million customers. The USA has 5,700 community banks with total assets of USD 4.7 trillion and Germany has 209 regional commercial banks with total assets of EUR 830 billion, as well as 400 local public savings banks, or ‘Sparkassen’. These regional stakeholder banks do the heavy lifting when it comes to lending to smaller businesses, financial inclusion, reinvesting in regions, tackling regional inequalities and supporting local economies during recessions.

One of the key advantages of smaller scale is the ability to gather additional information about local markets, industries, companies and investors that can improve credit decisions allowing them to do more and better lending to smaller business, as well as regionally important and specialist sectors.

What we’re doing at South West Mutual

The Community Savings Bank Association has been established to help create a network of regional community banks for the UK. South West Mutual is one of the early ones, seeking a banking licence for Cornwall, Devon, Somerset, and Dorset. We intend to offer a range of banking services, from current accounts and savings, to mortgages, loans and overdrafts for personal and SME customers. We will offer state of the art online and mobile banking but, unlike most other banks, we are also committing to maintain a branch network to serve our members’ needs.

The bank will be a commercial business seeking long-term profitability, but profits are not the sole reason for its existence. Our mission is to serve our members and to support the broader prosperity of our region. Integral to this is an approach to lending that takes full account of economic, social and environmental factors, including the need for a zero-carbon economy.

This makes us unique, being the only bank with all three of the following characteristics:

  • Participation. The bank will be a cooperative. All customers will be members and have a vote. This helps ensure that the Board keeps focused on the interests of members. Too often, executives in distant skyscrapers can lose sight of who they serve.
  • Purpose. We exist to promote more environmentally sustainable and widespread inclusive prosperity in the region. We will be financially profitable to serve this purpose.
  • Place. Reinvesting in the region. We are dedicated to the region and will use local deposits to fund local lending. Our local knowledge will be part of our competitive advantage.
What does that mean for food and farming sector businesses?

First, food and farming do not loom large in the balance sheets of massive global banks which devote much of their assets to financial trading, commercial property and large corporations. In contrast, small-scale regional banks reflect their local economy and focus on SMEs. And that means that food and farming become a top priority for those banks within more rural regions.

Second, for food and farming businesses adapting to a world where climate change is already affecting them and who want to future-proof their business for a zero-carbon economy, who better as a banking partner than a mission-led bank that is set up to finance the socially-just transition to a net zerocarbon economy?