A NEW German-style bank for Hampshire has won support from civic chiefs at Test Valley Borough Council.

The cabinet has pledged to invest £500,000 into the Hampshire County Bank which aims to support local people and business.

If successful it could see Test Valley Borough Council earning 6% back on their investment.

Finance chiefs gave their backing to the project and the borough council unanimously agreed to the venture.

Leader of the council, Ian Carr, said it was “an excellent idea”.

“It’s another way to get banks lending to businesses and residents,” he said. “The one in Bournemouth is operating really well and we hope that this can do the same. Obviously this one is going to be bigger so the results are going to be bigger. It’s also going to bring benefits to the community too.”

But he also exercised caution about the venture.

“We’re doing the due diligence to cover all the options but we’re hoping that the bank will be up and running by the end of the summer.”

Created by Local First, a community interest group, the bank will be a locally-owned and run bank for the benefit of local people.

In Germany, the Sparkassen group of local, independent, not-for-profit savings back has been running for the last 200 years and accounts for 70% of all retails bank deposits.

It is a not-for-profit spin-out from the Centre for Banking, Finance and Sustainable Development at the University of Southampton.

Professor Richard Werner is leading the project and has recruited a team of experienced banking professionals to assist him.

The group intends to raise £7m and hopes the Government will match it to create a total of £14m.

Over five years the bank could bring in more than £6.5 million into the borough and that figure could rise to more than £20 million over 10 years.

It is expected to support around 480 small and medium businesses throughout the county and provide funding to support £375millon of investment in the county’s economy.

Depending on the level of customer deposits, the bank hopes to lend at least £100m in its first year.

It is expected that seven to 11 jobs would be created for each £1 million of lending. That means that in the first five years there would be another 2,600 to 4,100 created.

Deposits up to £85,000 will be protected under the government protection scheme.

But a banking licence needs to be approved before it can get going.

Test Valley Borough Council’s economic portfolio holder said: “It is a risky venture setting up a new bank from scratch, but the fact that all profits will be ploughed back into local communities, and people in Test Valley will be given more choice in their banking must surely be viewed as a good idea.”

New Forest District, Winchester City, Eastleigh Borough, and Portsmouth City councils have all already said they would invest in the business.