Bernard Ginns: Let's have some new faces to shake up the banking sector

The Bank of England's latest financial stability report spells out the risks clearly. "Banks reining in lending to meet future regulatory requirements and to alleviate funding pressures could undermine economic growth and raise credit risk for all banks," it said.

Without the vital support, the private sector won't grow fast enough to fill the gap left by the shrinking public sector and unemployment will shoot up with painful consequences for us all.

How will Britain react when banks unveil bumper profits and bonuses as the country struggles with the harshest ever spending cuts? I fear there could be social unrest, particularly in those places where the economy is overly dependent on the state.

It will be a wretched spectacle for the newly jobless public servants to watch as well-heeled bankers try to defend their bonuses gained from casino-style investments backed with public money.

Given this sorry situation, I read with some optimism reports of new entrants coming into the banking sector. It desperately needs shaking up as increased competition for business is the only way to get banks lending again.

First, we have JC Flowers and Co, the US private equity firm, which is in talks with Kent Reliance Building Society about creating a joint venture to help bolster the mutual's balance sheet.

Importantly, the deal would give Flowers access to a banking licence. The buyout firm has stated ambitions in the UK banking market, having tried to buy Northern Rock in 2007.

There is speculation that Flowers would then be in the position to create a new bank by leading further consolidation of the building society sector, with reports yesterday that it could swallow up to ten mutuals.

The Yorkshire, Skipton and Leeds Building Societies all told me yesterday that they are committed to independent futures.

Second, we have Project New Bank from Lloyd's of London chairman Lord Levene and former Morgan Stanley banker Sir David Walker. They are planning to establish a presence on the high street by buying parts of nationalised banks like Northern Rock, Royal Bank of Scotland and Lloyds Banking Group.

Lending decisions will be made locally by staff who know their clients and any losses would be confined locally, say reports. A common complaint I hear is of businesses being told yes to an application at local level, only for it to be bounced back by a central committee.

More details will emerge of Project New Bank this week.

Third, Santander, the Spanish bank, hopes to increase its presence in the UK and is the sole bidder for 318 branches put up for sale after others, including Yorkshire Bank's owner, pulled out.

Commenting on the moves, John Kirkbright, a Yorkshireman who runs the K-Strat consultancy for the worldwide financial services industry, told me: "It would need somebody pretty big and with a very good brand name to have the impact that say a Wal-Mart had in coming in to UK food retailing or the much-heralded Best Buy coming in to challenge UK electrical retailers.

"It is clear however that potential new entrants see UK banks still being very vulnerable in terms of customer trust and confidence.

"My own view is that both UK and European banks have so far not done anything like enough to rebuild their customers' trust and confidence – hopefully a few new powerful entrants will jolt them into more concerted action than we have seen so far."

These developments should be seen as positive. The status quo is not conducive to a strong recovery.

I do hope you enjoy the coverage of our Yorkshire Post Business Barometer. It reflects the findings of 200 interviews with company directors from a range of sectors across the region.

The survey provides a useful insight into what the men and women running Yorkshire's businesses think about their present and future prospects.

It also reveals what business people think about business support, research and development investment, the quality of the region's infrastructure and their pensions provisions.

Thanks go to Brass – formerly known as Brahm – for carrying out the research, to Irwin Mitchell, the law firm, for sponsoring the report and to the delegates for such a lively debate. Enjoy the read and let me know if you agree or disagree with the findings.

To read the report and for audio and video, visit www.yorkshirepost.co.uk/ business