Mandelson to create a Post Office bank

Steve Dinneen
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LORD Mandelson will turn the Post Office into a “People’s Bank” if Labour wins the general election.

Key to the initiative is a potential deal with RBS and Santander to allow the banks’ customers to access the new Post Office accounts, and its subsidised offers. Negotiations are underway as the government seeks to ensure at least 86 per cent of current accounts would be accessible at Post Offices. A deal in principle is already in place for Santander’s business customers.

The scheme is designed to offer affordable mortgages to first time buyers and help ensure affordable credit is available. It could offer mortgages with a 90 per cent loan-to-value ratio.

The government will pledge £180m a year to the project to support the expansion to the Post Office’s financial services. However, some critics have warned the scheme could lead homeowners to get into negative equity.

Mandelson said: “The Post Office is a well-loved institution and this move will bring more banking services back to communities.”