I was musing the other day that just as, if you had some spare capital kicking around, now would be a good time to buy property, if you were seriously rich it would also be a good time to set up a bank. While the rest of the banks are in crisis and too scared of their own shadows to lend money, a new bank could, at least for a while, be the only show in town.
Well it seems that some other people have had the same idea. According to the Independent, six UK listed companies are behind a plan to set up a new bank. The new company would lend to corporate clients. A ‘City source’ told the Indie:
These guys are totally fed up with the problems with the inertia, so are looking to get together and create an institution that can lend to small and medium-sized firms. Given that most banks have horribly messy balance sheets, they figure it’s easier to start from scratch.
Capitalism has, somewhat unfairly, taken a bit of a knock over the past year or so. This is a good example of why, for all its faults, it still works. The existing players have screwed up so a new entrant comes along to snaffle some of their markets.
Let’s hope this new bank gets of the ground and starts providing capital for businesses sometime soon.