By Oliver Smith on Friday 3 April 2020
The high street bank has said its plan for business banking is “no longer commercially viable”.
Nationwide became the second recipient of the Banking Competition Remedies (BCR) fund to return cash this morning, handing back the £50m it was awarded in May 2019.
Nationwide’s board in the last few days have apparently decided “the option of entering the business banking market is no longer commercially viable” given the impact of coronavirus on the business.
The BCR said due to this decision it had “accepted a Revised Business Case” from the bank, which included not spending the money and returning the whole £50m plus interest.
Similar to Metro Bank, it does not appear that Nationwide is considered to be in material breach of the agreement it signed to accept the grant money, and will therefore not be charged the eight per cent interest plus Bank of England base rate penalty listed in the grant contract.
It appears this new Pool will be opened up to entirely new applicants (so Option 3 in Here are the BCR’s 3 options for Metro Bank’s returned £50m) with a timeline for the development of the new Pool’s objectives and process set out by the end of April.
The Remedies fund said this redeployment of funds was “foreseen in the design of BCR” and is now being accelerated.
“This is positive news for the many potential applicants who have already contacted us,” it said.
“Our awardees are delivering competitive and valuable solutions at a time of great challenges for SMEs and those who serve them.”
Certainly good news for all those fintechs who missed out in the last rounds of BCR grant funding.
Finally the BCR announced a change to the small business dowry payments from the Incentivised Switching Scheme—designed to switch business banking customers of RBS subsidiary Williams & Glyn to one of a dozen other business banks.
For the largest SME switchers with revenues of over £1m, the dowry payouts (which start at £6,250 and reach up to £50,000) can now be paid immediately rather than split over 12 months with two payments.
Last month the sizes of the dowry payments were boosted after the BCR admitted “more needs to be done” to hit its target of 120,000 businesses switching banks by August 2020.
The BCR was set up with £775m cash from the Royal Bank of Scotland and is part of European Union conditions attached to the £45bn government bailout of the high street bank at the height of the financial crisis over a decade ago.