FUNDING for the first local bank in Hampshire was confirmed last week when Vince Cable announced the Government had agreed crucial funding.

At a conference in Eastleigh on Friday (October 18) the Business Secretary confirmed a £250,000 grant, with a following £950,000 loan, to the Winchester-based community bank, Local First, as part of the green growth business fund.

Local First, currently a community interest company, was set up by Professor Richard Werner, from the University of Southampton, and several of his colleagues, to replicate banks in Germany.

Prof Werner, who has lived in Winchester for the last ten years, is the founding director of the Centre for Banking, Finance and Sustainable Development at the university.

“The whole idea for local banking started in Britain in 1810 when the first savings banks were introduced,” he said. “But over time that model got eroded and everything got larger.

“I think the financial crisis has made it clear to everyone that there’s a problem in the UK. We only have five banks that account for 95 per cent of banking deposits whereas Germany’s big banks account for 12 per cent. As a result you get a very different economy. When the issue struck, they didn’t have to slow down their lending and small and medium enterprises (SMEs) continued.”

Prof Werner has been raising capital for the operation over the last two years, alongside fellow directors Charles Bazlinton, Martin Read, Mike Battersby, Andy Riggs and Kostas Voutsinas, and successfully secured the grant under the regional growth fund.

“We have an ambitious plan to get the banking license by the end of next year, at the moment we are a CIC, but we need to raise capital,” Prof Werner said. “We need another £6m locally and it looks like we’re going to have the first £2m shortly. We hope the local authorities will take an interest because we don’t want to just attract the investors.”

The idea for the bank is to remain local and to work within its own parameters catering for Winchester customers. Once the money has been raised and they have received their banking license, the group hopes to start trading by the start of 2014 with a much bigger balance sheet close to the tune of £80m.

Prof Werner said: “What we have seen with the bigger banks is that they have lost their common sense and we want to keep the relationship with the customer by having a smaller scale operation.”