It was announced on 24 September 2012 that the Government intend to create a bank which will attract private sector funding and which, when fully operational, could support up to £10 billion of new and additional business lending. The Government will build a single institution that will address long-standing, structural gaps in the supply of finance and bring together in one place Government finance support for small and mid-sized businesses. It will also control the Government’s interests in a new wholesale funding mechanism which will be developed to unlock institutional investment to benefit small businesses.
The bank will be professionally run and commercially focused and operate at arms-length from Government. It will facilitate the provision of loans, including long-term capital, to UK firms through banks and other financial institutions.
It is intended that the new institution will operate through the wholesale markets, it will not have any retail presence and will not displace or subsidise banks. Its role is to encourage the development of private sector solutions and enable the market to work efficiently, not compete with it.
More detail on the design of the bank and the types of interventions it will support are likely to be available later in the year.