The Welsh Government’s manifesto pledge of establishing a community bank has been derailed with Monmouthshire Building Society confirming it has ceased working on the project due to what is said were challenging market conditions.
In a statement the Welsh Government said it remains committed to creating the bank, although even if another way of delivering the project can be identified, it is hard to see how it could happen this side of the Senedd elections in 2026.
The Welsh Government had engaged a company called Cambria Cydfuddiannol Ltd (CCL) to take the community bank project forward as a counter to the loss of so many high street branches across Wales. This resulted in an agreement in 2021 that it would be delivered by Monmouthshire Building Society with a separate entity from its current activities, but utilising its regulatory approvals from the Financial Conduct Authority and the Prudential Regulatory Authority. CCL, established by Mark Hooper and Tegid Roberts, received funding of £165,000 from the Welsh Government to develop the concept of a community bank. The aim was to have up to 30 physical branches across Wales, but will a digital offer as well.
While no funding was provided by the Welsh Government to Monmouthshire Building Society, the Cardiff Bay administration could have financed the necessary reserves needed for a new bank. That could have been in the region of £20m, before accounting for any start-up costs like branch assembly, recruitment, marketing and IT.
While supportive of a concept of a community bank, chief executive of the Swansea Building Society, Alun Williams, said it could create a competitor for its mortgage and saving products for itself other mutuals, as well as credit unions. He also criticised the fact that the building society was not approached about the concept.
Chief executive of the Monmouthshire Building Society, Will Carroll, said: “Monmouthshire Building Society is committed to providing successful and sustainable community banking for people and communities across Wales.
“As we’ve seen over recent months, the UK’s economic outlook remains uncertain – interest rates have risen to a 15 year high, house prices are falling and the cost-of-living crisis continues.
“As a purpose-driven mutual building society, we prioritise our members and the communities they live in, and we’ll always do the right and responsible thing.
“This means we won’t take any unnecessary risks that could potentially impact on the Society’s performance or the trust our members place in us. “Given current unpredictability and ongoing challenges facing the UK economy, we’ve decided to stop working on our community bank.
“We know this is disappointing, but we want to be honest with all those who have supported our work so far.
“I’d like to thank everyone that’s helped and supported us on our journey so far. We’re still committed to the people and communities of Wales and will continue to deliver products and services that are fit for purpose and meet the needs of our current members, future members and the communities we serve.”
The idea of a community bank (Banc Cambria) for Wales, is very much a pet project of First Minister Mark Drakeford. As he plans to stand down before the next Senedd elections, if a bank isn’t up and running by then, it is unclear whether it will be a Labour manifesto pledge for 2026. There were some civil servants who privately had some reservations about the merits of the community bank project.
While cash remains important, its use for financial transactions is on a downward trajectory with growing take up of digital banking. To counter the loss of bank branches in communities the UK Government has taken forward new access to cash legislation that will give more regulatory powers to ensure that banking provision continues.
The banks, through the UK’s cash access and LINK network, is also creating new banking hubs across the UK when the last branch in a community closes. A number, including for Risca, Abergele, Prestatyn, Treorchy and Welshpool, have already been approved and will become operational next year. The hubs will consist of a counter service operated by Post Office employees, where customers of any bank can withdraw and deposit cash, make bill payments and carry out regular banking transactions. On alternating days staff from specific banks will be available so people can speak to their own bank about problems or other banking issues they may need help with.
In a written statement Economy Minister Vaughan Gething said: “Whilst this news is clearly disappointing, MBS is an independent and commercial organisation, who has invested considerably in its work on community banking to date. MBS has received no Welsh Government funding, and it is for them to form their judgements on this matter and proceed accordingly.
“Finance is a highly regulated sector and any organisation bringing forward new proposals is subject to significant scrutiny from both the Prudential Regulation Authority and the Financial Conduct Authority. Indeed, despite many attempts by different organisations across the UK to establish a community bank, none has yet succeeded.
“Our vision remains unchanged – that is for community banking services to develop in Wales, adding value and choice in the financial ecosystem and supporting community wealth building. Welsh Government, therefore, remains open to working constructively with the sector to explore options and opportunities and we will continue to engage actively with CCL to this end.”
In a social media post Banc Cambria said: “We had all worked hard on this path to delivering Banc Cambria, but we will continue to work on other routes and we will give an update on how this is going this autumn.
“We know the need for community banking in Wales remains; the big banks continue to flee our communities, leaving town centre adrift and there remains a commitment from us, Welsh Government and our other partners to get this over the line this Senedd term.”
