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Why not an existing bank?
Given that the government already owns a large percentage of several banks, why does it not just turn one of those into a business bank, instead of going through all the fuss and bother of setting up a new one?
M
Doesn't address affordability of finance
The draft papers I've seen so far (and they are draft, so things could still change) indicate that the Business Bank will be a wholesale operation. Actual distribution of finance will be handled by retail banks.
The problem I can see with this is that the retail banks will treat it just the same as previous government business finance initiatives. They'll carry on lending to small businesses at the same unaffordable rates as at present, with the same strict criteria and additional terms - personal guarantees, charges on personal assets etc. The retail banks will be getting the funds at a favourable rate, and will just use the extra margin they make to pad their balance sheets and carry on paying high bonuses to senior staff.
I hope that when detailed plans are released by the government that the potential for abuse by retail banks is addressed, but I'm not optimistic.