Warrington Borough Council is thought to have become the first local authority to take a major shareholding in a bank.
The borough council has invested £30m to buy 33% of the new Redwood Bank, which has this week secured a banking licence following approval from the Financial Conduct Authority and Prudential Regulation Authority.
Redwood intends to offer lending products to owner occupied businesses and experienced commercial and residential property investors. It will also provide business deposit accounts.
It is to open a northern regional office in Warrington, to complement its headquarters in Letchworth, Hertfordshire.
Warrington’s executive board member for corporate finance, Russ Bowden, said: “This is a really important deal for Warrington and part of our commitment to innovative financial approaches which support growth and sustainability in the borough.
“We see our stake in the company as an investment in our future. It’s about investing in our local economy, helping businesses thrive and generating income which will enable us to protect council services. I’m delighted that the company has now been granted its banking licence and we can move forward towards its launch.”
Redwood co-founder Jonathan Rowland said Warrington’s investment demonstrated that the council “shares our vision to create a robust, secure and profitable bank that is not only well placed to deliver strong returns but also to stimulate sustainable economic growth in Warrington and the surrounding area”.