Nationwide wins lion’s share of business banking award
Nationwide Building Society has won a £50 million share of a fund aimed at boosting competition in the business banking sector.
The building society said the award will help fund its launch into business banking and pledged to match it with £50 million of its own funding over the next five years.
The Co-operative Bank and Investec Bank also secured smaller awards of £15 million each in the second round of a £775 million programme funded by Royal Bank of Scotland (RBS) to increase competition in business lending.
The fund was launched as a condition of RBS’s £45 billion bailout at the height of the financial crisis.
Joe Garner, chief executive of Nationwide, said: “This is good news for small businesses.
“The fund gives unprecedented opportunity to accelerate plans and inject competition into this market.”
He added: “While the money is a massive boost for our plan, we also aim to match every pound of the £50 million award with our own funding over a five-year plan.”
The mutual said it will recruit 400 new jobs across the UK, including at its Swindon head office, as part of its business banking plans.
It is aiming to attract an estimated 340,000 customers in the next five years, including 125,000 business current accounts switching to Nationwide.
The Co-op also vowed to pump in £17 million of its own funding to add to the RBS fund award, and said it would create up to 270 jobs under its small business lending commitments.
Investec said it would “at least” match the RBS award with its own investment and said it had committed to providing £300 million of additional lending to small businesses.
The latest awards in the business banking programme come after the initial round in February saw under-fire Metro Bank win the lion’s share, with £120 million, while challenger players Starling and ClearBank beat established groups CYBG and TSB to the prize.
But Metro’s success was controversial, given the recent disclosure that it miscalculated the risk weighting on commercial loans and is now being forced to raise about £350 million to correct the mistake and shore up its balance sheet.
Of the RBS programme, £425 million is being handed out from its capability and innovation fund to help bidders develop their current account, lending and payments offerings for business customers.
A further £350 million is being used to encourage RBS customers to switch to rival providers.
In December, eleven banks, including Starling, Monzo and TSB, won a share of this incentivised switching scheme.