WARRINGTON Borough Council will spend £30 million to buy a 33 per cent share in a new bank.

The executive board unanimously approved the move, which will see the authority obtain the stake in Redwood Bank, at the Town Hall yesterday, Monday.

The challenger bank, which will have its northern office in the town, anticipates receiving its banking licence in the coming months and could open as early as July.

The venture will see the council form a partnership with Acorn Financial Partners.

It will aim to support businesses that are struggling to obtain finances, as well as bidding to generate a return for the authority.

It will target secured lending to the area's small and medium-sized enterprises (SMEs) and national businesses to 'drive economic growth' in Warrington.

Cllr Russ Bowden, who is in charge of the budget, confirmed the principal reason for the investment is 'economic development'.

He said: "In Warrington, we are doing everything we can to support the economy and help businesses thrive.

"It's an important part of securing a better future for the borough.

"These proposals are part of this wider work. It's about us doing things differently and using innovative financial approaches to support growth and sustainability in Warrington."

Council officers confirmed a 'full due diligence exercise' has been carried out.

Cllr Bowden (LAB – Birchwood) added: "The business plan will be monitored closely, using performance against the business plan, and the council's investment is due to be staggered over three years to ensure the risk is mitigated.

"Corporation tax and all other tax liabilities will be paid direct by the bank."

Council leader Cllr Terry O'Neill highlighted the impact the move could have on residents across the borough.

He said: "We have been noted in national journals – we are one of the biggest towns to have growing SMEs here but we need to keep growing our SME base.

"This will enable our communities to get jobs. Normally, SMEs employ local labour.

"It is another way of growing opportunities and jobs for people in our town."

The bank will also provide business deposit accounts. 

The council will invest an initial £10 million in the scheme.

To mitigate risk, the business plan will be reviewed each year, with a view to investing a further £20 million over the following two years.