Eight years ago, on September 15th 2007, Northern Rock, that most North East of banks, was at the heart of events which brought the British banking system close to collapse.
It was on that day that local people here in the North East began to join queues outside the bank's high street branches in a desperate attempt to withdraw their savings, as rumours of its collapse began to spread across the region.
Two days later the Government was forced to step in to guarantee deposits to prevent a full scale run on the banks and just a few months letter it would nationalise the bank.
It is the from those ashes, from the ashes of banks that were too big to fail, too interested in big casino bets, and had forgotten the people the system is there to serve, that we are launching the Tynedale Community Bank.
The Archbishop of York John Sentamu will be making a special trip to the North East to launch the new Tynedale Community Bank at Hexham Abbey this Friday.
Friday will help mark a new chapter in the North East's relationship with banking. There has been much attempt to pin the banking crisis on one bad banker, one bad decision, or one merger too many. The truth is the British banking system was failing. Northern Rock was nationalised, Lehman Brothers went bust - and HBOS,
RBS, Bradford + Bingley, and Alliance + Leicester all came within days of going the same way.
Since then regulations have been tightened and new rules introduced, but the same old model remains. The UK banking market is still concentrated in six large banks that have over 75% of the UK’s current account market. Fundamentally we need new banks to break up that lack of competition.
The Tynedale Community Bank will be part of a growing number of community banks in the UK. A phenomenon the UK has been too slow to adopt.
Look at Germany, their banking market is evenly spread across various sectors, none of which – whether they are savings banks, co-operatives, or commercial banks – have more than a 26.5% share of the market. But where we did once have an additional local tier of banks 70 years ago, we now have just one dominant tier with the number of bank branches on the high streets down by 43% in the last 20 years alone.
Look at Germany, their banking market is evenly spread across various sectors, none of which – whether they are savings banks, co-operatives, or commercial banks – have more than a 26.5% share of the market. But where we did once have an additional local tier of banks 70 years ago, we now have just one dominant tier with the number of bank branches on the high streets down by 43% in the last 20 years alone.
By opening a new community based bank in Tynedale on Friday we will not solve the banking sectors problems over night but we will be helping to shine the light on a new way of banking in Britain.
Local banks, like the one we are the creating in Tynedale will be a local bank that serves the community when too often it has seemed the other way round. Local banks are based in the community, lend to the community, and make all of their decisions in the community. We will also make sure that profits are ploughed back into the local area.
The new Tynedale Community Bank is part of the Prince Bishops Community Bank who are providing infrastructure support and regulatory status based in County Durham.
