Street Cred: Local Banks & Strong Local Economies

By Stephen L. Clarke
June 2012
Distributed by Coronet Books Inc.
ISBN: 9781906837396
75 pages
$12.50 Paper original

Imagine an industry dominated by businesses that offer poor service, enjoy a terrible public image and lose billions of pounds. They don't go bust, but increase their market share under a supportive regulatory system. A ludicrous scenario, of course - but it describes much of Britain's banking industry today. Street Cred examines the failings of the current British banking market and the lessons that can be learned from local banks across Europe. The report considers Britain's banking system past and present, and explains how regulatory barriers to entry have bequeathed us a banking sector that is seriously unfit for service. This has harmed customers, businesses and neglected regions. Stephen L. Clarke explains how local banks helped to absorb much of the shock of the financial crisis in the Swiss and German economies, fostering a better recovery than that seen in the UK.

He also shows how Handelsbanken, a Swedish multinational bank with a decentralised structure, is now seen as one of the most profitable and resilient in the world. Unfortunately, Britain's local banking sector has been eroded over the course of the last three decades. Hasty and flawed privatisations; uncompetitive mergers; a regulatory structure that cements the position of the commercial banks; and the failure to empower local authorities have created a banking system that fails to serve the domestic economy. Barriers to entry must be removed. Local authorities need to be empowered to establish and assist entrepreneurs to create local banks to keep credit in the local community. While Britain's international finance industry was becoming the envy of the world, its domestic banking system was becoming a basket case. Street Cred shows that the British government should recognise the benefits that local banks bring to an economy and reform the banking system that currently enriches itself whilst neglecting businesses and consumers.


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