Development bank launch early in 2017, say ministers

Finance Wales was set up in 2001 and invests in small and medium-sized firms to help them grow

A bank aimed at making it easier for small businesses to borrow money and get advice will open early next year, the Welsh Government has confirmed.

Economy Secretary Ken Skates told AMs the Development Bank of Wales will have its head office in north Wales.

He is considering plans drawn up by Finance Wales, the government-owned investment agency, to create the bank.

Opposition AMs called for more details and said his announcement was a "rebrand" of Finance Wales.

Mr Skates said the business case for the bank was still in a draft form, but he would publish it in the New Year after the Welsh Government has gathered more feedback.

Two options for basing the bank in north Wales are being considered, one of which would cost £5m, he told the Senedd on Tuesday.

Finance Wales is currently based in Cardiff.

The bank is on course to launch in the first half of 2017 if approved by regulators and would have a target of investing £80m a year by 2022.

It would address "market failures" where businesses - in particular small and micro-businesses, and new start-ups - are not able to borrow money from private banks.

Ken Skates expects the new development bank to provide "value for money"

Although things had improved since the credit crunch, some small businesses were still struggling to get funding, Mr Skates said.

The bank will not compete with private-sector lenders, but will instead provide "top-up finance" to help companies grow.

"I am also challenging the bank to continuously improve its value for money, and work towards ambitious private sector leverage to reduce cost per job," Mr Skates added.

Welsh Conservative economy spokesman Russell George said Mr Skates's statement was a "cosmetic rebrand of Finance Wales" - something the minister denied, saying the Development Bank reflected calls from AMs to build on Finance Wales' experience and expertise.

Plaid Cymru shadow economy minister Adam Price said: "It's a step forward, but I don't think it's quite as radical or as transformative as it could have been."

A review written in 2013 by business expert Prof Dylan Jones-Evans questioned whether Finance Wales was doing enough to help the Welsh economy and recommended the creation of a development bank.

In October, it emerged that a subsidiary company of Finance Wales, FW Capital, was competing for work in the UK government's Northern Powerhouse project.

Mr Price said at the time that FW Capital's activities in England could conflict with the aim of helping businesses in Wales.

On Tuesday, Mr Skates said he recognised "this was something of a controversial issue", but that FW's activity in England would continue.

A cap on the income that the organisation can raise outside Wales would remain in place, he added.