June 2021 progress update
Updated: Jul 1
Hi I trust all is well.
I’m excited to be able to update you with some positive news on our progress to launching Avon Mutual, the inclusive, sustainable community bank for the West of England.
Imagine a bank rooted in and owned by its community and with a mission and business model not to extract value for the few but to mutualise the benefits of finance for all. A bank that helped build a new sustainable and inclusive economy for its region. Now this no longer has to be the stuff of dreams. With your support we are making this a reality here in the West of England and pioneering a model others will follow across the UK. Its been a long journey since our work was kicked off by the RSAs Inclusive Growth Commission and we have made amazing progress towards launching and hope to be up and running soon and working towards a year ten target of having lent over £1.2bn to our local economy. We have also strengthened our board with Gloucestershire based Ewan Silver, a leading fintech pioneer who was a founder of the challenger bank that eventually split to become Starling and Monzo and who has also built the tech for Mettle and Nutmeg. We are currently hitting two major milestones with another one on the horizon. In the first of these we are progressing well with the bank licensing process with the PRA and FCA and are currently putting the finishing touches to what we hope will be our near final Regulatory Business Plan. Our plans are now to have reached the critical ‘Challenge’ stage of the licensing process later this year - a stage at which more than 90% of banks go on to gain a bank license. Once through that stage we can expect between 6 and 9 months of final licensing process work with the regulators before we gain an initial ‘Authorisation With Restrictions’ allowing us to build and test systems and start the launch of the bank to the public. Our second major milestone relates to local government engagement and support. We are pleased that last September RSM Corporate Finance completed due diligence for Bristol City Council and a consortium of other regional local authorities in connection with potential major investment in our final £25m investment raise. We have also recently submitted our Economic, Social and Environmental Impact framework for RSM to now undertake the second final stage of this due diligence. With the climate and nature emergency and inequality now being centre stage in the ‘levelling up’ and 'build back better' agendas, we are very excited about the outputs of this Impact Framework process and have already identified preliminary headline impacts which give a sense of what we will aim to deliver. These include a local multiplier economic impact of £740m-£1.7bn in the first 10 years of operation, excluding any economic impacts from financial inclusion and mortgage lending and 79,000 jobs created or protected through our lending and operations. We will be serving more than 15,400 SMEs, including sole traders, urban independents, and 3,300 charities and other mission driven businesses. We will have 66,800 individual customers of which more than 10,300 will be financially vulnerable. Delivering on the inclusivity aspect of our mission, 2,200 unbanked people will be brought into the financial system with their own current account, producing at least £700,000 saving per year on the Poverty Premium and £0.9m savings in interest for vulnerable customers versus high cost credit. At least £533m of our assets will be based in the ‘real economy’ rather than the speculative ‘financialised’ economy, and we will derive £155m of our revenues from activities in the real economy (75%). And by year 10 £390m assets will be with projects that create a positive social, economic, or environmental impact. We have a growing list of supporters across the region and in key roles nationally. For example Danny Kruger, Devizes MP called for government support of our bank in his recent Levelling Up Communities report saying “We need a new era of community power to replace the era of large public and private bureaucracies….The allocation of private capital in the UK is too short-termist and, by reinforcing success in the South East and the big city centres, it perpetuates inequality between and within regions. A necessary corrective to this is a proper regional banking system, which understands the strengths and needs of an area and supports local businesses over the long term. Good work is being done in this space.” Similarly Salisbury MP John Glen, Financial Secretary to the Treasury and City Minister, has said “The Government welcomes the efforts to establish regional mutual banks and recognises the importance of diversity in the banking system. Officials have been engaging with prospective mutual banks over their efforts to raise capital and look forward to further discussions. Your vision for the benefits which mutual banks rooted in local communities could create is compelling and I welcome your efforts to establish regional mutual banks.” We have similar support from businesses and business networks, community groups, faith groups and leading figures from across the region. In addition it is great to have strong support from key figures in Parliament including Kevin Hollinrake MP, Co Chair of the APPG on Fair Banking who has said of our movement “Given whats at stake and the imperative of building an economy that serves our mutual interest, utterly compelling”. The APPG’s Vice Chair Lord Holmes who has in addition made proposals for amendments to the Financial Services Bill for support for our banks. Bank of England Governor, Andrew Bailey, has been vocal in his support for our model and its also exciting to have Andy Haldane, until recently Chief Economist at the Bank Of England, championing our local banking model and joining as the new CEO at the RSA, who initiated our movement back in 2017. We are proud to have a number of our supporters and our investors writing supportive words which you can read here including local business people, community leaders and leading figures from the environmental community. As a result of reaching these major milestones and having already raised £1.7m start up funds, we are now commencing a new investment round, intended to take us through the remainder of the licensing and build process to launch the bank. You can download an information document here that gives an overview and update on the bank and its intended economic, social and environmental impacts. Please contact us for further information and also let me know if you know anyone else who would be interested in being in contact about this. With very best wishes, The Avon Mutual team