City leader Mike Whitby has come under pressure to drop plans for a Municipal Bank, from ten of his own councillors.
The group of Conservative rebels are angry that they were never consulted over the scheme and believe it will be too costly and deliver too little, too late to help businesses tackle the recession.
In a letter to the Post, signed by the group of ten, they say that Birmingham City Council has no business opening a bank and are critical of the leadership for raising expectations of a Municipal Bank.
Group members are said to be angry that the headline grabbing policy was announced late last year without consulting with backbench councillors, although their spokesman, Coun Matt Bennett (Stockland Green) insisted that it was not a rebellion.
He said: “The Conservative group did not discuss this or make it policy. Therefore we cannot be said to be rebelling against party policy.
“We are simply stating that we do not support a municipal bank.”
The letter says: “Some bankers may have been pretty bad at running their banks responsibly, but it certainly does not follow that the council could do a better job.”
They say that public announcements over the bank have raised expectations and are worried about the council taking on top-up loans to fund mortgage deposits, that is taking on the riskiest part of a loan.
It adds: “We believe that enough taxpayers’ money has been poured into the banking system of late without the need for an extra contribution from the council taxpayers of Birmingham.”
The ten councillors are Coun Bennett, Gareth Compton (Erdington), Peter Smallbone (Quinton), Philip Parkin (Sutton Trinity), Peter Howard (Sutton Four Oaks), Randal Brew (Northfield), Reg Corns (Northfield), Graham Green (Oscott), Colin Hughes (Billesley) and Margaret Waddington (Sutton Trinity).
Coun Whitby, who has championed the bank as a means of helping families and businesses through the recession, was not last night available for comment.