New wave of banks may enter sector

British Enterprise Bank (BEB) last week unveiled plans to provide "banking by businessmen for businessmen" and aims to open about 20 branches across the country.

It has the backing of City financiers and has applied for a banking licence.

BEB plans to open in out-of-town locations such as business parks, including in Leeds. It has already started an international fundraising drive to raise 100m in start-up funds.

Professor Merlin Stone, an academic and consultant who is advising the venture, said BEB will exclusively target small to medium-sized enterprises which have been unable to access funds from mainstream UK banks.

"The criticism is everybody has been tarred with the same brush," he said.

"There's always a gap for a good bank, particularly if it's strong and focused on what it's trying to do. In our case it's small businesses.

"I would expect there to be more banks coming along and some of them to come from other players in other sectors. There's plenty of room for this."

BEB plans to poach experienced staff from the UK's large clearing banks.

It will be funded through deposits of at least 1,000, fixed for three years. Loans will start at 1m.

"The potential is good in Yorkshire," said Prof Stone. "Yorkshire is one of the hubs of the economy. It's still very strong in financial services and many of the big guys are in Leeds or the surrounding area."

Among BEB's backers are Jono Shorrock, a former Morgan Stanley and Merrill Lynch banker, and property entrepreneur Brett Alegre-Wood.