With fears mounting over supply chain and financial disruptions as a result of Brexit, the Royal Bank of Scotland (RBS) has reportedly set aside a fund worth $2.6 billion to help small- and medium-sized businesses (SMBs) manage and mitigate the uncertainty.
Reports in the Financial Times said on Tuesday (Oct. 23) that RBS will use the funds for trade finance, term finance and liquidity financing for SMBs that conduct trade with the European Union (EU) or have significant exposure to foreign exchange (FX) volatility. The bank will reach out to an estimated 2,000 small business customers of RBS and NatWest to offer the financing.
Brexit "will require businesses to think strategically and tactically about how to navigate what is still an uncertain period ahead," said RBS SEO of Commercial and Private Banking Alison Rose, according to FT.
RBS' small business financing effort is in addition to the $1.3 billion the bank has allocated as part of its "growth funding" program, launched earlier this year, as the institution works to restore its reputation with small businesses after regulators found the bank to have mistreated some SMB customers. The bank has raised criticism against U.K. regulators for its inability to penalize RBS for that misconduct.
The bank has also criticized policymakers for "sleepwalking" toward a no-deal Brexit, in the words of RBS CEO Ross McEwan, FT said. McEwan warned earlier this month that such a scenario would have significant, negative economic effects.
Reports said that, in addition to boosting its reputation with small businesses, RBS is working to ensure that it retains SMB customers after the EU required it to provide $1 billion to promote industry competition and bank switching, resulting from its bailout following the financial crisis. That bailout program will begin in February.
The publication spoke with another, unnamed high-street bank that said it was examining how to ensure top financial institutions (FIs) are able to support corporate customers that face supply chain issues resulting from a no-deal Brexit, in response to concerns that some banks may withdraw credit.
"It's about making sure Britain stays open," the unnamed executive said.