14th May 2019 14:15
LONDON (Alliance News) - Nationwide Building Society said Tuesday it has secured a GBP50 million grant from the Royal Bank of Scotland Group PLC's Capability & Innovation Fund.
RBS set up the GBP775 million fund as part of its government bailout following the financial crisis in 2008. The fund is administered by Banking Competition Remedies Ltd - which aims to increase competition in lending to small businesses in the UK.
Nationwide said the grant will "turbocharge" its entry into the business banking market.
"This is good news for small businesses. The fund gives unprecedented opportunity to accelerate plans and inject competition into this market. As a building society, we are in a unique position as the only mutual with the scale, trust and track record to offer a compelling alternative to the banks," said Chief Executive Joe Garner.
The building society's new business banking arm will look to offer unsecured loans, credit cards and savings.
Nationwide said it was committed to launching a business current account whether it received funding or not but said the grant will allow it to provide training for 7,000 staff and create 400 new jobs.
Nationwide is hoping to lure about 340,000 customers over the next five years, including 125,000 business current accounts switching to the building society.
"The grant will also be used to develop a suite of associated products and services aimed at making the lives of business owners easier, from support with accountancy and cashflow to assistance with foreign payments," the building society said.
Garner added: "While the money is a massive boost for our plan, we also aim to match every pound of the GBP50 million award with our own funding over a five-year plan. As a mutual organisation driven by our social purpose, it is important that business owners are given more choice to find an account which suits their needs and we look forward to delivering this proposition."
The fund was dividend into four separate pools - where UK lenders could apply and compete for funding.
Previously, the fund issued GBP120 million to struggling challenger bank Metro Bank PLC but dealt a blow to fellow Scottish lender CYBG PLC after turning down the Glasgow-headquartered bank's proposal.
To date, the GBP120 million awarded Metro Bank is the single largest grant.
Related Shares:
RBS.LMetro BankCYBG