British lender Nationwide Building Society has curbed its plan to begin a business banking venture, saying the coronavirus has made that field nonviable for the time being.
Nationwide’s decision represents a major shift in plans spurred by the pandemic that has infected and killed thousands worldwide and also upended the world economy, forcing businesses to close and laying off workers by the millions.
The lender said in a statement that the virus had “changed the medium-term interest rate landscape” and made it untenable for newcomers for now.
The idea for Nationwide to enter the business banking field was sparked a year ago when the lender achieved a grant from the Banking Competition Remedies (BCR) scheme that intends to level the playing field for underdogs trying to compete against much bigger and more established rivals.
Now, because of backing off from that plan, Nationwide will be out around 70 million pounds that it had invested into the concept. Employees who had been working on the idea will be shifted to other projects in the company, Nationwide said.
The lender will also be giving back the 50 million pound grant from the BCR fund, the statement said.
Metro Bank was the first lender to say it would return the 50 million BCR pounds, though Metro will still be trying to accomplish a fraction of its plans to work in the business banking field.
After the cancellations from Nationwide and Metro, BCR announced that it would let other institutions apply for the 100 million pounds returned by both institutions.
Meanwhile, British Finance Minister Rishi Sunak is readying a new program to give government financial aid to small businesses struggling because of the pandemic’s effects. The Corporate Finance Network, made up of accountants, has said as much as 18 percent of all small and medium-sized businesses will be at risk of completely collapsing because of the current fiscal state of the world with the pandemic.
In early March, Nationwide announced it was pushing the business banking initiative back to later in 2020 to focus on more testing for its mobile app.