The Scottish League of Credit Unions has traditionally been the champion of the smallest, most local of credit unions. The kind that often operate out of a committee member’s front room and are wholly dependent on volunteers.
In the past year, a depressing number of these have folded – the result of increasingly complex regulatory requirements and changing trends in the market. But that‘s not to suggest that there’s no room for innovation within the community-led credit union sector. A small number have just come together to form a new ‘Bank’.
Castle Community Bank was formed from the merger of Castle Credit Union, North Edinburgh Credit Union and Water of Leith Credit Union.
The new bank said it will provide people within the EH postcode catchment area with savings and loan products, “similar to ‘high street’ institutions, but with the emphasis firmly on sustainable banking and a truly ethical approach which puts ‘people before profit’”.
The bank is fully owned by its members and will operate as a not-for-profit, and any surplus funds being used to fund community projects around Edinburgh.
Castle Community Bank said while financial cooperatives have traditionally provided financial support to those unable to access high street banking facilities, it is also attracting interest from young professionals and others looking to bank with an ethical financial institution.
Reverend Iain May, Minister of South Leith Parish Church in Edinburgh and former marketing manager with RBS and head of planning and strategy with Allied Irish Bank Group, helped set up the new bank.
He said: “Whilst we are different in structure to a traditional High Street bank, we adhere to the same robust regulatory requirements and independent scrutiny aimed at protecting our customer’s interests.
“Castle Community Bank has taken well over a year to launch, because of the systems we had to adopt.
“Our core principle is to ensure that the vulnerable in our communities do not have to get caught up in a debt spiral or turn to payday lenders to make ends meet.
“Equally, our market research indicated that people across the city would welcome a bank with a strong ethical policy, one that took corporate social responsibility to its heart within every facet of its operation and, importantly, ensures that 100 per cent of all profits were re-invested into the community at all times.
“On that basis, Castle Community Bank is a bank for all.”
The bank said its customer base is already in four figures and is active across savings and loans.
Castle Community Bank said its Capital Access Ratio is 17 per cent compared with the three per cent regulatory minimum and like other banks is regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
The bank currently has two ‘walk in’ branches in Niddrie and Wardieburn, and also offers 24/7 online banking.
Reverend May said: “People want a community lender based in their community.
“I am absolutely certain that as we grow and the word spreads and people see the very competitive interest rates we offer, many will make the decision that some or all of their money should be in our community bank, rather than a large multinational which may be based in Frankfurt, London or Shanghai.
“It will make sense to a lot of people that investment in their own community bank gives something back t