A WINCHESTER city councillor has branded plans for a proposed new local bank as “rubbish”.

Cllr Malcolm Wright believes the city council should not get involved with the Hampshire Community Bank which aims to support local businesses.

The council is being asked to put forward £250,000 towards the £14 million start-up costs.

Cllr Wright, a Conservative member, told the overview and scrutiny committee last night that he thought the scheme was unrealistic: “Predicted yields of six per cent are pie in the sky. No bank can afford to do that kind of lending.

“People are not going to borrow at ten per cent interest when they can do it at five per cent elsewhere. Frankly, I think it is rubbish and I won’t be supporting it.”

Alexis Garlick, chief finance officer, said the £250,000 should be seen as a grant rather than an investment, a proposal to support a business development opportunity.”

But Lib Dem group leader Kelsie Learney said she supported the new bank. “We are talking about helping businesses that find it difficult to get funding elsewhere.

“It will have local people working in it who will have a look at a local business model and see if it makes sense rather than a chap at a desk in London who may have no idea about Hampshire watercress beds whatever it might be.”

This idea is being led by Professor Richard Werner, director of the Centre for Banking, Finance and Sustainable Development at Southampton University.

He and a group of like minded people have set up a company called “Local First Community Interest Company” (LFCIC) which is seeking investors to develop and launch a not-for-profit bank.

It is hoped the bank will go live in 2015.

Half the £14 million is being raised locally with the rest due to come from the Government.