Former chief executive for the Bank of Scotland Peter Burt will chair a group tasked with advising the government on the framework of the new business bank.
Business secretary Vince Cable has appointed Peter Burt to help set up the coalition’s business bank.
The business bank will attempt to support what it calls as the development of a ‘greater diversity’ of non-bank business finance sources. It will deploy £1 billion of new capital and pursue joint investment opportunities with the private sector using government guarantees.
Burt has formerly acted as chief executive of the Bank of Scotland and says that the business bank will help provide ‘long term finance solutions for SMEs.’
‘There has been a significant long-standing gap in SME finance, so it is welcome news that the government is taking action to tackle this problem,’ Burt says.
‘I’m delighted to have been asked to help the government in their work to create this institution and recognise the potential this institution has in changing the finance landscape.’
Speaking during the Autumn Statement earlier in the month when new details of the business bank were revealed, chancellor George Osborne said, ‘The government is creating a business bank to transform the way the government delivers support to SMEs.
‘It will deploy £1 billion of additional capital to address structural gaps in the supply of finance to SMEs and stimulate the provision of long-term capital, including by leveraging in substantial private sector finance.’
The creation of the business bank comes on the back of Tim Breedon’s report on non-bank finance, which looked at alternative sources of finance for UK businesses.
Private sector funding will be sought, combined with £1 billion of government funding, so that the venture will eventually support up to £10 billion of new and additional business lending.
Under the plans unveiled during Osborne’s third Autumn Statement, the new bank will have some functions operational by spring 2013 and will be fully operational in late 2014.
Cable comments, ‘Small and medium-sized businesses are the lifeblood of the British economy but they are currently struggling to accrue the long-term capital they need to grow. This is an important gap in their growth cycle which the business bank will plug by offering new sources of finance.
‘To help deliver this, the government will be advised by a talented panel of experts, led by Sir Peter Burt. It is important we get the development of the bank right. This is a long term, durable institution, not a quick-fix gimmick, and I’m confident that we are on track to deliver this help.’
The government says that it is expected the institution will operate on a commercial basis within a strategic framework set by ministers.