An "interim arrangement" will be set up by the Cabinet Office and the Big Lottery Fund to deliver the functions of the Big Society Bank while it awaits approval from the European Commission under state aid rules.
The bank will lend money secured from dormant bank accounts to support retail lenders working in social investment, but the commission must agree that this does not contravene state aid rules.
These rules say that governments must not give undue advantage to a particular business sector.
Nick Hurd, the Minister for Civil Society, said at the launch of the government’s social investment strategy yesterday that European Commission approval was not expected to be secured by the time the first funds become available, which is expected to be the middle of this year.
He said the plan was to "work with the Big Lottery Fund to set up interim arrangements that would allow them to carry out funding"; this arrangement meant the government would be in a position to start lending by the third quarter.
Hurd also said that his understanding was that the £200m invested in the Big Society Bank by four high-street banks would be invested on a permanent basis.
At the same meeting, the government announced that the venture capitalist Sir Ronald Cohen and the investment banker Nick O'Donohoe would act as advisers on the structure and staffing of the Big Society Bank.
The National Endowment for Science, Technology and the Arts announced at the meeting three new social finance projects that it felt were concepts the bank might support.
Among them was a £20m bond project being launched by Charity Bank alongside an unnamed disability charity, a new fund to invest between £50,000 and £250,000 in social enterprises, run by Finance South East and Resonance, and the expansion of a business that lends small amounts to people in poverty, run by Fair Finance.