Wales

Development bank for Wales set for recommendation, BBC understands

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Image caption The review could spell the end of Finance Wales

A development bank for businesses is expected to be recommended by a panel of experts, BBC Wales understands.

The Welsh government set up the review over concerns that firms were not able to borrow the money they needed to grow and take on staff.

This is the third and final report by economist Professor Dylan Jones-Evans which will focus on whether a development bank is required.

Previous reports found a £500m gap between borrowing needs and lending.

The disparity between what businesses want to borrow and what banks are willing to lend came about following the economic crisis that began in 2007 and reached its height a year later.

Performance

The other reports by a panel of experts led by Professor Jones-Evans also raised questions about how well the arms-length body, Finance Wales, which is publicly funded, was performing in terms of getting money to businesses and meeting its job creation targets.

Finance Wales has helped many businesses with financial support, however it has been criticised for charging high interest rates.

The organisation says its loans are risk-based so it charges high rates where the risk is high.

If the report does call for a development bank, as expected, it will raise questions about whether Finance Wales has any future.

The development bank could bring together all loans and business advice in one place.

At the moment, companies can access loans through the UK government, the Welsh government and Finance Wales.

The development bank could also offer business advice.

How it interacts with high street banks would also need to be addressed in order to encourage them to lend to firms.

This is a major development in how the Welsh government supports businesses.

Critics of the proposed development bank raised concerns that it would be under the direct influence of the Welsh government as opposed to Finance Wales, which is an arms-length body.

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