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Government unveils further details of the ‘people’s bank’

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by Kay Mitchell

The Government has today outlined further plans for the Post Office to become a ‘people’s bank’ after injecting a further £180 million funding into the project, on top of the £1.7 billion already invested. The aim is to make the branches more sustainable.

The Post Office Bank, led by Business Secretary Lord Peter Mandelson, will create a ‘People’s Bank’ and will see 11,500 Post Office outlets as the backbone of a new national bank, which is set to encourage saving and provide credit for those on low incomes.

According to the Government, the plans will turn the Post Office into “a leading player in financial services” and is expected to be a core part in its election manifesto.

Business Secretary, Lord Peter Mandelson, said: “Since the global banking crisis we have set about reinventing the financial services industry piece by piece, building a system that is fairer, trusted and more responsible.

“Today is the next step in that process. The Post Office is a well-loved community institution and this move will bring more banking services back to the heart of those communities,” added Lord Mandelson.

As well as encouraging low-paid workers to save by contributing 50p for every £1 saved in a new Saving Gateway account, the Post Office is also set to offer a new mortgage product with a 90% loan-to-value ratio targeted at first-time buyers.

The Post Office already offers a range of banking services and bill payments after it embarked on a joint venture with the Bank of Ireland in 2004 which then allowed it to provide mortgages, loans and credit cards.

Ministers hope the moves to expand the Post Office will prevent further Post Office closures and see an end to plans of part-privatisation of Royal Mail, the parent company of Post Office Ltd.

The move has been welcomed by many consumer groups, who believe that small businesses, as well as those in rural and deprived urban areas where there are fewer banks, will benefit.

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News posted: March 29, 2010

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