THE “Bank of Bournemouth” has been formally closed by the council after making a loss of nearly £200,000.

The Community Finance Initiative was launched by the borough in April 2014 after £15million of capital was set aside to help first-time buyers and start-up businesses.

But, as reported in the Echo in December, the scheme lent money to just 22 businesses in an 18-month period. This fell well below the council’s prediction of supplying 15 loans a month in its first year.

And on Wednesday the authority’s cabinet approved a recommendation to cease trading altogether.

“On reflection and looking at the performance of the CFI, the total investment in the initiative was £1.1m excluding amounts actually loaned (business loans and mortgages),” said the council’s acting executive finance director Ian Milner, in a report he had prepared on the scheme.

“The interest return over the life of the loans and mortgages is forecast to be £0.9m. Much of the investment was required in establishing an FCA regulatory compliant operation which incurred significant external professional support.

“The council has issued nearly £1.9m in mortgages and loans to date supporting homeowners and businesses. To date 90 jobs have been created as a result.”

By the end of the current financial year, the scheme is forecast to have lost £188,677.

Council leader John Beesley said that the scheme was set up to “address some really significant priorities for our local economy at the time”.

“Let’s wind back and remember that the financial climate was very different,” said Cllr Beesley.

“The ability and willingness of accounts and institutions to lend, either to small businesses or start-ups in particular, or indeed mortgages for first time buyers, was virtually non-existent.

“We felt we should use some of our resources to help stimulate that market to give some encouragement to those budding entrepreneurs to take that leap of faith and set up a business.

“Since then of course a lot things have changed. Principally amongst them is the government has taken up an agenda around housing and made it a national issue – and of course there is more opportunity today for those start-up businesses than existed a few years ago.”