RBS to become fintech fund and high street outlet for challenger banks under HMT remedy
The UK Government is proposing a package of measures worth £750 million which would transform state-owned RBS into a gateway for challenger bank access to the high street and small and medium-sized business market.
The proposals follow RBS’ failure to divest of the banking operations of Williams & Glyn, one of a set of sell-offs agreed with the European Commission in return for its state-backed bailout following the 2008 banking crisis.
HM Treasury has been in touch with the European Commission for an amendment to the deal that would instead see the UK bank pushed to act as a speed-ramp for new challenger bank entrants to the UK’s financial services scene.
The proposed package of measures includes:
– a fund, administered by an independent body, that eligible challenger banks can access to increase their business banking capabilities
– funding for eligible challenger banks to help them incentivise SMEs to switch their accounts from RBS paid in the form of “dowries” to challenger banks to use to incentivise switching
– RBS granting business customers of eligible challenger banks access to its branch network for cash and cheque handling, to support the measures above
– an independent fund to invest in fintech to support the “business banking of the future”.
The estimated upfront cost of the proposed package to RBS is expected to be in the region of £750m.
An HMT spokesperson says: “This new plan provides a clear blueprint to increase competition in the UK’s business banking market, and would help RBS resolve one of its most significant legacy issues which has held back the sale of the taxpayers’ stake.”
Discussions with the European Commission are ongoing while the UK Government conducts a market-testing exercise to assess the feasibility of the proposals.