The not-for-profit Castle Community Bank is offering residents attractive savings and borrowing rates as well as ethical practice
A new not-for-profit community bank promising to shun bankers' bonuses and offer attractive savings and borrowing rates for residents instead has launched in Edinburgh.
Castle Community Bank has opened two branches in the Niddrie and Wardieburn areas of the capital and was created following the merger of the long established Craigmillar and North Edinburgh credit unions.
The bank will provide those who have an EH postcode with savings, loans and online banking services just as a traditional high-street bank would. The big difference is that it will plough any surplus funds back into communities around Edinburgh.
Fully owned by its customers who become members when they open an account, the bank has no shareholders and is free of the shackles of shareholder dividends, fat cat bonuses and significant banking costs.
Many will make the decision that some or all of their money should be in our community bank, rather than in Frankfurt, London or Shanghai
Reverend Iain May, minister of South Leith Parish Church in Edinburgh and a former marketing manager with RBS and head of planning and strategy for Allied Irish Bank Group, helped set up the new bank.
He said while financial cooperatives are traditionally geared towards people on low incomes that may have difficulty accessing services and credit from mainstream banks, Castle Community Bank is attracting interest from young professionals and others motivated by conscience to place their finances in the hands of an ethical financial institution.
“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,” he said.
“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% 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 has a growing customer base, running well into four figures and a healthy deposit of customer savings as well as an active loan book.
It offers competitive interest rates on fixed-term deposits as well as free life cover on personal loans and savings accounts and all savings are protected by the Financial Services Compensation Scheme (FSCS) – up to £75,000. It is also regulated by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) - similarly to banks.
Rev May added: “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.”