Jersey might benefit from the setting up of a States-owned bank, according to a former president of the Jersey Chamber of Commerce, Kevin Keen.

Keen believes that that the retention of money in the local economy would be a significant benefit as would also additional competition in the sector.

But the idea has received a luke-warm response from a number of leading figures in the finance industry.

He said that it might be the right time to reduce the impact of the credit crunch and make it easier for islanders to get loans for sensitive business propositions.

He believes that a savings bank, that could accept deposits from local residents and lend only to local individuals and businesses on sound propositions and security, could help ease pressure on islanders.

But some finance professionals believe that such an institution would not be sustainable in such a small market.

The managing director of UBS bank, Hans Baerlocher, said it was a