Cable pushes ‘challenger bank’ role in solving SME finance drought

Vince Cable 480

“Challenger” banks such as Aldermore and the Co-operative Bank could play an important role in the Government’s plans to get credit flowing to small businesses.

Business secretary Vince Cable will today set out a series of economic strategies to support sectors like advanced manufacturing, the digital economy and how to ensure small businesses have access to credit, according to the reports.

Cable will say that a state-backed bank which will lend to SMEs would work with smaller “challenger banks” such as Aldermore and the Co-op to free up credit for businesses.

According to the Financal Times, Cable will say: “In the UK such a bank could operate through alternative providers such as the new challenger banks like Handelsbanken, the Co-Op and Aldermore and non-bank lenders: boosting their lending capacity as well as corralling existing provision such as co-investment and guarantees to support business expansion.”

Germany has a similar lender in the state-backed Kreditanstalt für Wiederaufbau, which stands behind other lenders.

Co-op finalised a deal for the 632 Lloyds branches up for sale as part of Project Verde, while Aldermore launched as a bank in the UK in 2009.