Financial aid is crucial to the regeneration of towns formerly dependent on a single industry. BUSINESS ARGUS looks at how one bank is helping to lead a revival in the Gwent valleys following the demise of its main employer

WHEN Corus closed the Ebbw Vale steel plant in July, an industrial history stretching over two centuries came to a momentary halt.

The local economy had all but collapsed and unemployment is twice the national average.

But, amid the gloom, there are bright beams. With public funding - and support from Barclays and UK Steel, the Corus subsidiary - there is new investment in town and an emerging hi-tech industry.

New arrivals include Technology Concepts, originally set up in 1983 on the back of computer networking technology developed at Cardiff University.

A couple of years ago, the firm started making smart card terminals, mainly for the Middle East. It needed fresh investment, but conventional bank loans and venture capital funding were not available.

The solution was £125,000 of equity and loan support from Finance Wales, the fund financed by Barclays and the European Commission to support economic regeneration in the region, plus a similar amount from UK Steel. There was also a Regional Selective Assistance Grant of £232,000 from the Assembly.

As a result, Technology Concepts - now also a Barclays customer - moved to Ebbw Vale and is hiring new employees.

"We would never have been able to do this without the funding," says the firm's managing director, Ray Hulmes. "It was vital."

Working with Finance Wales is an example of Barclays Business Banking's commercial support for companies in regeneration areas. Barclays has allocated £24.9 million and the European Commission £20.4 million.

For the area's Medium Business team, this activity is a boon. "It's had a wonderful impact," says relationship manager Martin Leech. "We're doing business we otherwise couldn't have done."

For the government, funds like Finance Wales bring social benefits arising from a return to economic prosperity. For Barclays, they help build profitable customer relationships while keeping the lending risks involved in check.

"Commercial deals with social goals," is how Mark Ford, who heads Business Banking's Urban and Regional Economic Development Unit (URED), sums it up. "We use our expertise to make a profit by meeting a market need," he said.

One need is to plug what financiers call the 'equity gap' for small and medium-sized enterprises (SMEs). This is the unmet demand for equity finance that lies between the upper limit of what banks will lend and the lower limit that tempts investment from venture capitalists.

The URED team works in partnership with regional development agencies - most of which already have a close working relationship with Barclays - the UK government and the European Commission to help provide the finance for regional investment funds.

Typically, these funds are made up of debt from Barclays and grants from the European Commission, and money is lent to SMEs at commercial rates in target regions via intermediary fund management bodies. Barclays has allocated £200 million for this activity.

Barclays also supports regeneration via the financial inclusion element of its social responsibility programme. This includes making finance available to small firms and social enterprises via community development finance institutions, which lend to organisations unable to borrow from banks.

"This helps create jobs, which is great for the local economy, but also provides Barclays with a commercial return," says head of Barclays Financial Inclusion team, Peter Kelly. From Mark Ford's perspective, a key element in all this activity is "sustainability" - making it viable by bringing companies into mainstream banking and developing new customer relationships.

And amid uncertain times in Ebbw Vale, customer Ray Hulmes is equally clear: "It's having a massive impact," he says.