Archbishop of Canterbury says new focus on businesses outside capital needed to help regenerate poverty-hit regions
The archbishop of Canterbury, Justin Welby, has called for a revival of regional banks, in a week when the Co-op, one of the “challenger banks” seen as a potential rival to the high-street giants, has fallen under the control of US hedge funds leaving the future of its ethical stance in question.
Speaking on Thursday at A Blueprint for Better Business?, an ethical business conference in London, Welby said the financial services system needed to be redesigned to focus on startups and small businesses outside London.
He said this was desperately needed “if there is going to be regeneration of the economy and a serious attack on the appalling poverty that is now three-generational in some parts of our country”.
His comments come just days after the Co-op Group was forced by US hedge funds to relinquish control of its Manchester-based banking arm.
Welby, who also sat on the parliamentary commission on banking standards, added: “We’ve moved over the last half century to one of the most concentrated banking systems in the world. With 50 or 60 regional banks in somewhere like Germany and very few major banks in the UK.
“The reality is that all the major investment decisions are taken in London and that can be a very long way away from the local situation and can ignore very much the social and the economic impact in distant places. It didn’t used to be the case. We used to have banks all over the place. We now have [a] few banks that are too big to fail and arguably too big to manage.”
On Monday, after months of intense talks with two US hedge funds, the Co-op Group – which also owns pharmacies, grocers and funeral homes – was forced to cede majority control of its bank as part of its battle to plug a £1.5bn capital shortfall and stave off nationalisation.
The group, which was formed by the Rochdale Pioneers in 1844, will be left with a 30% stake when the bank is floated on the stock market, far less than the 75% it had originally hoped for when the rescue deal was first announced in June.
The dramatic change in control, which is likely to take place later this year, has also led to concerns about cultural change within the bank, its future approach to its ethical stance and the job prospects of its 10,000 staff.
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