The RBS funding package for SMEs and the impact of

its delay

£775m of RBS funding, known as the ‘alternative remedies package’, is to be implemented by the Banking Competition Remedies (BCR). Challenger banks will be able to bid on the fund, which is designed to increase competition in the SME lending market. As well as being of potential benefit to SMEs it could also be a saving grace for RBS, who this year have been rocked by accusations that subsidiary Global Restructuring Group (GRG) exploited struggling SMEs to reach internal targets.

The alternative remedies package was approved by the European Commission in September 2017, though plans for implementation in the summer have been pushed back to November this year.

The origins of the alternative remedies package dates to 2009, when the European Commission approved a number of state aid measures granted to RBS. This approval was granted on the basis of a restructuring plan submitted by RBS and a number of commitments provided by the UK Government.

Challenger banks hoping to benefit from the package have been frustrated by the length of time before the funds have been made available. Metro Bank, CYBG, Starling, TSB, and Santander have all spent significant sums preparing bids, only for rollout to be pushed back and the very process itself remaining unclear.

RBS is also required to encourage SME customers to move from its Williams & Glyn branch network to alternative lenders, as a means of diversifying the SME banking market. This programme, known as the Incentivised Switching Scheme, has also had extension placed on an expected launch date.

In response to the delays and subsequent coverage by ITV News, The Telegraph and other media outlets, the BCR issued a progress report:

“Since the appointment of the two existing board members at the end of April 2018, there has been an intense period of set-up, due diligence, recruitment of third director and staff, as well as RFI/RFP activity and establishment of written policies, along with financial, reporting and administrative processes.

“With the staff team joining over the coming months, BCR is now operationally ready to oversee the package of measures designed to enhance competition in the UK SME banking market.”

The third director joining is Aidene Walsh, current chief executive officer of The Fairbanking Foundation and former global services transaction head at RBS.

Speaking to ITV News, Anne Boden, chief executive and founder of digital bank Starling, said of delays to implementation: “It’s now almost 10 years since the financial crisis and since RBS took billions of pounds in bailout funding, and the subsequent consolidation in the banking marketplace.

“We will see further consolidation unless something is done about it. We are still waiting for the RBS remedies fund to be distributed.”