Birmingham Council leader, Mike Whitby spoke about the plans
A municipal bank could be set up by Birmingham City Council for the first time in 40 years to help residents through the economic downturn.
Council leader Mike Whitby proposed the idea of a Bank of Birmingham to city businessmen at a breakfast meeting.
A council-run bank was originally set up by the then Lord Mayor Neville Chamberlain in 1916 to help the city recover after the war.
It became a trustee savings bank in 1967 and later merged with Lloyds TSB.
At the Birmingham Prospectus breakfast briefing Mr Whitby said that the credit crunch had put "intolerable pressure on many small, yet sound businesses, people trying to get on the property ladder and those seeking to invest in the city".
Mr Whitby added: "Birmingham has a long tradition of innovation in municipal government.
"This has included the provision of gas, water, electricity, public transport and housing.
"We once ran a municipal bank, and given the recent market failings, I think the time might be right for us to do so again."
Under the plans the council could offer loans to businesses and other potential investors in the city.
The authority would also look at ways to help make the local mortgage market more stable.
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