The Bank of Hampshire?

Proponents say the unique financial institution – dubbed HantsFund – will be an alternative for residents and businesses failed by the major banks.

The consortium of Hampshire business leaders, financial experts and councils behind the scheme say it will help kickstart the county’s economy and housing market.

HantsFund, which could be open for business in a matter of months, will soon start inviting councils, savers and businesses across Britain to withdraw their cash from the banks and open accounts at the new firm.

That’s according to Southampton solicitor Caroline Williams, the scheme’s architect and chairman of the Hampshire Economic Partnership.

She explained that HantsFund will be run as a commercial bank, but will take investments from both private and public investors across Britain.

Investors can expect to receive higher returns on their investment, as HantsFund won’t be laden with the toxic debt that has plagued the banks.

The cash will then be loaned as residential and commercial mortgages exclusively in Hampshire. The funds would be available to hopeful homebuyers and companies struggling to secure credit from high street lenders.

Mrs Williams said she had already received support from the Hampshire business community and local councils and said the time was right for a local solution to a bigger problem.

“Savers are very concerned that they are not getting any interest on their money and they also worried about the security of where they are putting it, while borrowers are concerned because they can’t actually borrow any money,” she said.

“I think there will be a lot of feeling that it will be good to put your money in your own local economy, where you can actually see the value of your security. You will also know that by doing that you are helping the economy in which you live and work and that everyone will do better as a result.”

Business leaders, financial experts and lawyers will meet with Hampshire County Council Cabinet members on Thursday to thrash out the structure of the bank.

Once the details have been signed off, legal experts will be brought in to get the necessary regulatory approvals for HantsFund to begin taking deposits and lending.

The proposal will then be presented to potential investors and other local authorities including Hampshire County Council, which has £108m in reserves.

Councillor Jonathan Glen, Hampshire County Council Cabinet member for economic development, skills and human resources, said no decision had yet been taken on whether public cash would be invested in HantsFund.

However, he said the council was keen to support a scheme that could both boost its taxpayers’ savings returns and help local residents and businesses access credit.

“If we can help in a small way to show that even local authorities can help with finance, lending money and mortgages then I can’t wait to get started,”

Cllr Glen said.

“We would also be doing this for the taxpayer, because the more interest we can get out of what we have saved over all the years, the less we have to increase council tax.”

It is still unknown exactly how much capital would have to be raised for HantsFund to be licensed by the Financial Services Authority. However, it would need to be millions of pounds.

Mrs Williams, whose Southampton-based investment firm BC Capital is leading the scheme, said savers across the country would be tempted with the promise of higher saving rates.

“We are expecting the money to come from private individuals, those people who are all wondering where to put their savings, plus pension funds, companies with savings and local authorities,” she said.

Asked how safe any cash invested in HantsFund would be, Mrs Williams said it would be “as safe as houses” because it would be based on sensible lending to local people in Hampshire.

Cllr Glen, who is a financial adviser in his own right, said anger was growing throughout Hampshire at the behaviour of bankers and the way they had failed their customers.

“I am amazed that they have already had billions out of our Government and they won’t let the money go because they are scared they won’t get a return on it,” he said.

“I am also horrified by the idea that any of the banks that taxpayers have bailed out are still planning to pay bonuses to their staff. It is greed on a extraordinary scale.”

Cllr Glen said HantsFund should be a return to ethical, community-based banking.

“If we can prove to the public at large that we have got a good system, which is sound and true, then maybe the banks will take notice – and I hope the public will thank us for it,” he said.