The UK government and EU Commission have agreed in principle to a plan to resolve RBS’ final state aid commitment.
The alternative remedies package, worth approximately £835 million, will see RBS fund and deliver a package of measures to improve the UK business banking market and is designed to boost competition, helping small and medium sized enterprises (SMEs) benefit from greater choice and offers on banking services.
The revised package consolidates the previously announced remedies into two enhanced measures:
- a £425 million Capability & Innovation Fund, administered by an independent body, comprised of 15 grants that eligible challenger banks and other financial services providers can compete for to increase their business banking capabilities. These awards will range from £5 million to £120 million.
- £350 million of funding to incentivise SMEs to switch their accounts from the business previously described as Williams & Glyn to eligible challengers, comprised of £225 million paid in the form of “dowries” to challengers to use to incentivise SMEs to switch their business current accounts, £50 million to facilitate the switching of related loans, and £75 million set aside by RBS to cover customers’ switching costs. This fund is intended to facilitate the switching of 120,000 (3%) SMEs and includes safeguards to maximise the likelihood of achieving this target (including the possibility of extending the scheme outside the Williams & Glyn customer base in certain circumstances).
Stephen Barclay, economic secretary to the Treasury, said: “The announcement today will help boost competition in the business banking market and marks another significant milestone in resolving a major legacy issue at RBS.
“It builds on the recent settlement with the Federal Housing Finance Agency and together they show the progress being made to resolve RBS’s outstanding issues.”