Eleven banks have been granted access to a £350 million ($443 million USD) program that will allow for them to take business clients away from the Royal Bank of Scotland (RBS).
According to Financial Times (FT), RBS is funding the program as concessions for a bailout that allowed it to keep its subsidiary Williams & Glyn. In exchange, regulators want those funds to be used by competitors to promote bank switching and industry competition.
In addition, RBS is paying £425 million in cash awards to fund its rival financial institutions’ (FIs’) investments in business banking services. The first round of recipients should be announced in February.
The 11 FIs are now cleared to make special offers to lure selected RBS customers away. Godfrey Cromwell, chairman of Banking Competition Remedies (BCR), which is managing the program, said it was “very good news that a broad selection of organizations have stepped forward and made a diversity of offers right across the [small business (SMB)] client base.”
BCR even approved four banks that don’t meet all the criteria needed to join the program. That move came after digital and financial services startups complained that they were being unfairly kept out of competition. BCR added that it would review a second round of applications in late spring.
The 11 banks chosen for the program in this round are: Arbuthnot Latham, CYBG, The Co-operative Bank, Hampden & Co, Metro Bank, Monzo, Nationwide Building Society, Santander, Starling Bank, Handelsbanken and TSB.
In the meantime, RBS is helping SMBs to prepare for Brexit. It was reported in October that the bank had set aside a $2.6 billion fund to help SMBs manage the uncertainty surrounding the U.K.’s impending exit from the European Union (EU). The bank will use the money for trade finance, term finance and liquidity financing for SMBs, with RBS contacting an estimated 2,000 customers of RBS and NatWest to offer the financing.