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Vince Cable has set out plans for a state bank that will bring billions of pounds of aid together in a “one stop shop” to help credit starved small businesses secure finance and address an over-reliance on high street banks. The Business Bank will manage £2.9bn worth of existing Government debt and equity schemes designed to ease access to finance, and deploy a further £1bn to boost areas such as non-bank lending channels, the business secretary said. “Inadequate access to finance for small and medium sized enterprises is one of the biggest risks to economic recovery. We need bold action to fix what has always been a weakness of the UK economy, and since the financial crisis, [it] has become an urgent problem,” he said. “By bringing together management, budgets, spending authorities and the power to alter or create new schemes into one place this Government will be providing a more coherent and comprehensive package of support for businesses.” The organisation will not directly lend to small businesses but will give advice on suitable facilities and schemes as well as providing cheap wholesale finance for alternative lenders and so called 'challenger banks’. It will also attempt to develop “new long-term growth finance products”. More: http://www.telegraph.co.uk/finance/yourbusiness/9946942/Vince-Cable-outlines-plans-for-Business-Bank.html
Bosses preside over 'moral quagmire', says business secretary, as Barclays chief Bob Diamond is summoned to face MPs. Vince Cable has urged shareholders in UK banks to rise up and purge their companies of corrupt executives, who he says have allowed "systemic abuse" to take root in the banking system. The business secretary, writing in the Observer, says it is now clear that no one at Barclays Capital, the investment bank that triggered the market-rigging scandal, is prepared to take responsibility for endemic corruption, so the ultimate owners of banks must take matters into their own hands. Describing the problems in UK banking as "a moral quagmire of almost biblical proportions", Cable says the government is taking urgent action, including creating a clearer separation between "casino-style investment banking" and retail banking on the high street. Ministers will this week begin a review into the Libor system under which banks lend to each other and Cable hints that US-style criminal sanctions, such as the threat of prison terms, could be considered against those who abuse it. But he says shareholder power will be crucial. "Regulators are a backstop: they don't own banks," he writes. "The governance at the top of our leading banks has been shown to be lamentably weak. No one at the top of Barclays will take responsibility for systemic abuse. "Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives." Shareholders have already opposed the pay package of Sir Martin Sorrell, the head of advertising giant WPP, while Trinity Mirror boss Sly Bailey and Aviva's chief executive Andrew Moss quit following opposition from investors. Some shareholders were also unhappy with the remuneration package offered to Tesco's senior management in light of the supermarket's recent performance. Cable says he is determined to encourage "cultural change" throughout the system. He cites the takeover by the not-for-profit Co-operative Bank of a large chunk of the Lloyds bank network as a model for a future system. More: http://www.guardian.co.uk/business/2012/jun/30/vince-cable-shareholders-bank-cheats