Boss of £775m Royal Bank of Scotland competition payout confirms Santander UK is in running
The head of a scheme to pay out £775m from Royal Bank of Scotland (RBS) to boost banking sector competition today confirmed that Santander UK and other large lenders are in the running for multi-million-pound award, in spite of criticisms from rival banks.
The scheme, designed by the Treasury but run independently by Banking Competition Remedies (BCR), has faced criticism for allowing large banks to bid for the money, aimed at improving the market for small business banking.
Godfrey Cromwell, BCR's executive chair, today said: "We come to this with an open mind. Every case will be judged on its merits."
The BCR did not set the eligibility requirements, but its five-member top team will have responsibility for choosing award winners based on the business cases put forward by applicants.
Anne Boden, the chief executive of digital-only bank Starling, told Morning Wire the body should choose "new entrants that embrace the latest technology, as opposed to traditional players". Starling will bid for the three largest awards of between £60m and £120m.
Both Santander UK, owned by Spanish global giant Banco Santander, and Nationwide, the UK's largest building society, are eligible for the free funding, as neither have an extensive small business lending operation in place.
A Santander UK spokesperson confirmed it intends to bid for the top awards on offer in a bid to "bring real competition to the SME market", arguing it "can loosen the grip of the big four banks".
A Nationwide spokesperson said the firm intends to bid on the smaller awards of up to £50m.
Banks and fintechs will from Monday be able to access application forms. In total £425m is on offer for a "capability and innovation fund" split between 15 parties, alongside another £350m to incentivise business customers to switch away from RBS.
Banking Competition Remedies (BCR), the body charged with judging the contest, held a briefing with potential applicant firms this morning. The application window for the first awards will start in November.
RBS was forced to give up the money to address concerns over unfair state aid, after the high street lending giant was bailed out by the government during the financial crisis. The bank had agreed to sell its Williams and Glyn brand, but failed to find a buyer willing to take on the massive project of splitting its computer systems.
The winners of the money will be announced in February, more than a decade after RBS almost ran out of money in the midst of the crash. Applicants had been told the process would start in June 2018, but the Treasury struggled to find people with the skills to run the process.
CYBG, Aldermore, Metro Bank, Shawbrook and Starling are all expected to challenge for the larger payouts by analysts. TSB had been in a prime position, but its prospects have been dented by recent computer issues, which prompted the resignation of chief executive Paul Pester.
Christoph Rieche, chief executive of small business lending fintech Iwoca, said the package could be a "catalyst for change" for services to "previously neglected SME customers". Iwoca is bidding for grants of £10m and £5m from the funds.