British Business Bank

British Business Bank plc (BBB) is a state-owned economic development bank established by the UK Government. Its aim is to increase the supply of credit to small and medium enterprises (SMEs) as well as providing business advice services. It is structured as a public limited company and is owned by the Department for Business, Energy and Industrial Strategy (BEIS, formerly known as the Department of Business, Innovation and Skills or BIS). The bank has its headquarters in Sheffield.

British Business Bank plc
TypeState owned public limited company
IndustryFinancial services
Investments
Predecessors
Founded1 November 2014 (2014-11-01)
Headquarters
Sheffield
,
United Kingdom
Key people
OwnerHM Government
(Department for Business, Energy and Industrial Strategy)
Subsidiaries
[1]
Websitebritish-business-bank.co.uk

History

The intention to create a business bank was first announced by the Secretary of State for Business, Innovation and Skills, Vince Cable, in September 2012 with an initial £1 billion of government funding.[2] The aim was to bring a number of government financial schemes, advice services and expertise together, creating a one stop shop for small and medium enterprises (SMEs) to go to. From 1 October 2013, Capital for Enterprise Limited (CfEL), BIS SME policy teams and private sector expertise were brought together within BIS to start the British Business Bank programme. On 2 December 2013 the Deputy Prime Minister, Nick Clegg, announced that the bank would be based in Sheffield, as well confirming an extra £250 million of government funding.[3] On 15 October 2014, the bank was granted state aid clearance from the EU Commission[4] and the programme was subsequently transferred from BIS to British Business Bank plc on 1 November 2014.[5]

In 2018 the National Security Strategic Investment Fund (NSSIF) was created to provide long-term equity in advanced technologies relevant to national security, partly modeled on In-Q-Tel in the U.S.[6][7] The UK intelligence and security agencies, led by the Secret Intelligence Service (MI6), will provide guidance to the investments. The kind of technologies previously developed within government have now often been commoditised and are produced in the private sector.[8][9]

Operations

The bank has taken on all financial schemes previously controlled by Capital for Enterprise Limited (CfEL), such as Enterprise Capital Funds, the Enterprise Finance Guarantee, Business Angel Co-investment Funds and the Small Firms Loan Guarantee. In addition, the bank ran the assessment process to select Bizfitech, Funding Xchange and Funding Options as designated finance platforms for the bank referral scheme.[10]

The business bank mainly targets its assistance to companies with a turnover of up to £25 million. The bank does not lend to SMEs directly, but instead works with other financial institutions to increase access to funding, such as by providing part-guarantees for loans.[11]

After the January 2018 liquidation of Carillion threatened thousands of suppliers, particularly SMEs, £100 million of lending was offered by the British Business Bank,[12] alongside a fund established by HSBC, Royal Bank of Scotland and Lloyds Bank.[13]

In 2020 the NSSIF was involved in the British Government decision to invest £400 million for a 45% stake in OneWeb, a struggling low earth orbit satellite communications business.[6] It was reported that the UK would repurpose the satellites for the United Kingdom Global Navigation Satellite System.[14]

Future

The business bank came under criticism from rebuildingsociety.com for its execution of the Funding for Lending scheme, where it has created unfair competition in the UK peer-to-peer lending industry by concentrating financial support via the largest platforms.[15]

Under her manifesto for the 2017 general election, Prime Minister Theresa May announced that the bank would take over from the European Investment Bank, after Brexit, receiving the UK funds hitherto earmarked for the European Investment Fund.[16] The British Business Bank would open new offices in Edinburgh, Manchester, Birmingham, Cambridge, Newport, and Bristol. The manifestos of other parties have not announced any changes (in any policy area) as a result of Brexit.

References
  1. "Corporate information and subsidiary companies - British Business Bank". British Business Bank. Retrieved 3 February 2018.
  2. "Lib Dem conference: Cable promises £1bn 'business bank'". BBC News. Retrieved 10 February 2014.
  3. "Government's British Business Bank gets another £250m". The Guardian. Retrieved 10 February 2014.
  4. "European Commission approves British Business Bank". Reuters. Retrieved 3 November 2014.
  5. "Lending already reaching smaller businesses for the British Business Bank on day 1". British Business Bank. Retrieved 3 November 2014.
  6. Cook, James (18 July 2020). "The secretive UK fund behind the government's $500m investment in OneWeb". The Daily Telegraph. Retrieved 24 July 2020.
  7. Long, Alexis (28 February 2020). "What the UK can learn from the US about national security innovation". Civil Service World. Dods Parliamentary Communications. Retrieved 24 July 2020.
  8. Bond, David (25 September 2018). "Tech companies targeted in mission to develop new spy tools". Financial Times. Retrieved 24 July 2020.
  9. "The National Security Strategic Investment Fund". British Business Bank. Retrieved 24 July 2020.
  10. "Finance platform referrals policy". Retrieved 5 November 2016.
  11. "British Business Bank to target SMEs with potential". Financial Times. Retrieved 10 February 2014.
  12. "Carillion collapse: UK puts up £100m to back Carillion contractor loans". BBC News. BBC. 3 February 2018. Retrieved 5 February 2018.
  13. Gill, Oliver (18 January 2018). "Government sets up Carillion task force". City AM. Archived from the original on 22 January 2018. Retrieved 5 February 2018.
  14. "UK government takes £400 million stake in satellite firm OneWeb". BBC News. 3 July 2020.
  15. "Government interference risks distorting UK P2P market, say lenders". Financial Times. Retrieved 15 December 2014.
  16. "Economic interventions sometimes justified, but Tories must remember government has limitations". Institute of Directors. 18 May 2017. Retrieved 4 June 2020.
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