Eleven banks chosen to join £350m RBS scheme to boost business banking competition

Eleven banks have been chosen to join a £350m scheme to encourage small businesses to move away from RBS in a bid to boost competition.

Challenger banks including Monzo, Metro and Starling as well as Santander, Co-operative, CYBG and TSB were selected by the Banking Competition Remedies body (BCR) and funding amounts will be revealed in February.

The organisation was set up to distribute a £775m RBS fund designed to boost business banking competition, established as a condition of its £45bn government bailout during the financial crisis.

The BCR has announced eleven banks that have been successful through the fund’s ‘incentivised switching scheme’, set to provide a maximum of £275m to small and medium sized businesses (SMEs) to switch to challenger institutions.

A further four organisations applied but did not meet the criteria but the BCR said they were set to be compliant early in 2019.

RBS will also receive £75m to cover the cost of customers switching.

Arbuthnot Latham & Co, Hampden & Co, Nationwide Building Society and Svenska Handelsbanken were also chosen by BCR.

Nationwide and Monzo were selected despite not yet having a business current account offering.

Chairman Godfrey Cromwell said: “It’s very good news that a broad selection of organisations have stepped forward and made a diversity of offers across the SME client base.”

“Customers will be the real decision makers here. We look forward to getting through the contracting stage and seeing these offers made public so that customers can react.”

Cromwell added that BCR expected more offers in a further application round in the second quarter of next year.