…By Alan Peterson for TDPel Media.
The Derailment of the Welsh Government’s Community Bank Project
The Welsh Government’s plans to establish a community bank have encountered a setback as Monmouthshire Building Society announced that it has ceased working on the project due to challenging market conditions.
This development has raised concerns about the feasibility of delivering the bank before the Senedd elections in 2026.
Background of the Community Bank Project
In an effort to address the loss of numerous high street bank branches across Wales, the Welsh Government had enlisted the services of Cambria Cydfuddiannol Ltd (CCL) to spearhead the community bank project.
The project was envisioned to be implemented by Monmouthshire Building Society as a separate entity, utilizing its regulatory approvals from the Financial Conduct Authority and the Prudential Regulatory Authority.
CCL, supported by £165,000 in funding from the Welsh Government, aimed to establish up to 30 physical branches across Wales, supplemented by a digital offering.
Lack of Funding and Concerns from Stakeholders
While the Welsh Government did not provide direct funding to Monmouthshire Building Society, it had the potential to provide the necessary reserves required for a new bank, estimated to be around £20 million, excluding start-up costs such as branch assembly, recruitment, marketing, and IT.
Chief Executive of Swansea Building Society, Alun Williams, expressed support for the concept of a community bank but raised concerns about potential competition with mortgage and savings products offered by his institution and other mutuals, as well as credit unions.
Williams also criticized the fact that the building society had not been consulted about the project.
Reasons for Withdrawal and Commitment to Members
Monmouthshire Building Society’s Chief Executive, Will Carroll, cited the uncertain economic outlook of the UK, with rising interest rates, falling house prices, and an ongoing cost-of-living crisis, as reasons for halting work on the community bank.
Carroll emphasized the building society’s commitment to providing successful and sustainable community banking services for the people and communities of Wales.
He stressed the importance of not taking unnecessary risks that could impact the society’s performance or the trust placed in it by members.
Despite the discontinuation of the community bank project, Monmouthshire Building Society remains dedicated to meeting the needs of its current and future members.
Future of the Community Bank Project and Concerns
The community bank project, known as Banc Cambria, has been championed by First Minister Mark Drakeford, who plans to step down before the next Senedd elections.
If the bank is not operational by then, it is uncertain whether it will be included as a manifesto pledge for the Labour Party in 2026.
Some civil servants have privately expressed reservations about the merits of the community bank project.
Digital Banking and Access to Cash Initiatives
As the use of cash for financial transactions declines, the UK Government has enacted new legislation to ensure continued access to banking services.
The legislation grants regulatory powers to maintain banking provision.
Additionally, the UK’s cash access and LINK network are establishing new banking hubs across the country to compensate for the closure of bank branches in communities.
These hubs, such as those approved for Risca, Abergele, Prestatyn, Treorchy, and Welshpool, will offer counter services operated by Post Office employees, allowing customers from any bank to withdraw and deposit cash, make bill payments, and carry out regular banking transactions.
Specific bank staff will also be available on designated days to address customer issues and other banking matters.
Welsh Government’s Response and Future Collaboration
Economy Minister Vaughan Gething acknowledged the disappointment caused by Monmouthshire Building Society’s withdrawal from the community bank project.
However, Gething emphasized that the society is an independent commercial organization that has invested significantly in the project.
He clarified that the society received no funding from the Welsh Government, and it is their prerogative to make decisions and proceed accordingly.
Gething reaffirmed the Welsh Government’s commitment to developing community banking services in Wales and expressed openness to collaborating with the sector to explore alternative options and opportunities.
Active engagement with CCL will continue towards this objective.
Continued Pursuit of Community Banking
In a social media post, Banc Cambria expressed their dedication to finding alternative routes for delivering community banking in Wales.
Despite the setback, the need for community banking remains evident, as major banks continue to withdraw from communities, leaving town centers devoid of banking services.
The Welsh Government, Banc Cambria, and other partners maintain their commitment to bringing a community bank to fruition within the current Senedd term, with further updates expected in the autumn.
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