The Community Bank aims to allow local people to save and borrow without falling prey to high-interest ‘payday lenders’ and loan sharks and has been made possible with grant funding totalling £465,000 from the SSI Task Force, and a further £50,000 from Middlesbrough Council.
It is hoped the area’s first ever Community Banks will open this summer, in central premises just like those of traditional high street banks.
Subject to agreement by Middlesbrough Council’s Executive next week, work will now start to commission an established credit union to deliver the new service.
Support and advice for the initiative will also be provided by the Council’s banking partner NatWest.
The pioneering Community Bank is a key strand of elected Mayor Dave Budd’s 2025 Vision for a Fairer, Safer and Stronger Middlesbrough.
Mayor Budd, himself a former high street bank manager, said: “A great deal of work has gone into this, and I’m confident it will help to address some very real challenges faced by all too many in our communities.
“The Community Bank will help people achieve financial stability by enabling them to save and borrow away from the clutches of unscrupulous loan sharks and payday lenders.
“They prey on the vulnerable who feel excluded by the traditional high street institutions, forcing them into a vicious spiral of debt from which it can be all but impossible to escape.”
The Community Bank’s prominent town centre location will give it the look and feel of a high street bank, he said, boosting people’s confidence in using it.
Mayor Budd added: “It’s a stark fact that the poorer people are, the more they pay for credit, and this is an attempt to redress that balance.
“We are not promising to solve everyone’s problems overnight, but we can make a real difference to those who – because of poor credit history or other factors beyond their control - find themselves financially excluded and exploited.”
Cllr Sue Jeffrey, Leader of Redcar & Cleveland Borough Council, said: “Staff from Redcar & Cleveland and Middlesbrough Councils, as well as members of the SSI Taskforce, have been working hard to make this idea a reality for some time in order to help communities across both boroughs.
“The Community Bank will allow residents to safely save money and take out loans without falling victim to loan sharks who blight our communities.
“The bank will also give financial support and advice to help residents who might be experiencing money worries.
“Sadly, it is too easy to get into a spiral of ever-increasing debts but our aim is that this new bank will allow people to regain their financial confidence once again.
“This new Community Bank builds on the work Redcar & Cleveland Borough Council has been doing with South Bank Credit Union as well as our own Financial Support Team to help residents going through money troubles.”
- The Middlesbrough Community Bank initiative will be considered at a meeting of Middlesbrough Council's Executive on Tuesday, January 23.