A CONSERVATIVE minister will steal a march on Labour today, when he calls for a 'regional bank' in the North-East to end the lending drought.

Greg Clark, a Treasury minister, will tell a groundbreaking summit in Gateshead that the region has the potential to host such a bank, saying: "The market is there."

Speaking to The Northern Echo, ahead of the summit, the minister said: "I think the North-East is large enough to merit having a regional bank.
"This is something that could start in the North-East, as well as happening in other areas, such as Birmingham."

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The comments come just weeks after Labour leader Ed Miliband pledged to set up a network of 20-odd local banks, modelled on the admired Sparkassen system, in Germany.

Business leaders would no longer have loan applications tossed aside by London-based banking chiefs, more interested in risky investments overseas, he vowed.

Meanwhile, Justin Welby, the Archbishop of Canterbury, has also called for lenders to be broken up into regional banks to end the "current mess",
The former Bishop of Durham, who sits on the Parliamentary Banking Commission, is believed to favour the break-up - rather than simple sell-off - of state-owned RBS.

In the interview, Mr Clark stressed that he was advocating the setting up of new banks that would "challenge" the giants.

The Government's role was to ensure regulations did not "get in the way" of local organisations, or entrepreneurs, trying to set up a new bank.

He said: "I want to send a clear signal that the Government wants to encourage this.

"The North-East's economic prospects are very positive, given its export performance, which is the best in the country. It is also the second in the country for inward investment.

"The German system has major advantages. It delivers local knowledge and familiarity, both industrial and the personal knowledge of businesses."
The summit has been organised by the left-leaning IPPR think-tank and Guy Opperman, the Conservative MP for Hexham.

Mr Opperman said: "Banking is too concentrated in a small number of players, and a small number of geographical locations.
"This conference is all about our efforts to tackle this problem. There is a real opportunity for new entrants to build strong local and regional relationships."

Among the organisations attending the event, at the Baltic Centre, are the Financial Conduct Authority, CBI North East, the North East Local Enterprise Partnership (Lep) and Anthony Thomson, founder and former chairman of Metro Bank.

Jeremy Middleton, chair of the Lep's investment panel, is a strong advocate for a North-East based bank, which he believes could inject up to £1bn into the region's cash-strapped small firms.

He said: "Access to finance is the biggest factor holding back growth across this region.

"We want to encourage expansion of growing companies. A regional bank would understand the needs of the region and be able to react effectively, unblocking financial bottlenecks that frustrate business owners."

He pointed to the success of alternative lenders such as Handeslbanken and Metro Bank as proof that there was growing demand for an alternative to high street banks.

James Ramsbotham, NECC chief executive, said: “Given that the financial crisis was created by significant failures in the banking system, we should always be looking for new ways to provide sustainable business funding to successful businesses in the North-East.

“I very much look forward to hearing the case being made for a regional business bank at the Baltic event.”