Subscribe to our e-newsletter
Follow us on Twitter
Privacy and cookies
Established 1995
Thursday 18 January 2018

LATEST NEWS

RBS to spend £900m on FinTech under EC deal

Written by Anthony Strzalek
28/07/2017

RBS has been informed by the Treasury that an alternative remedies package has been agreed with the European Commission (EC) regarding its state aid obligations, which could see the bank spend almost £900 million funding FinTech startups and challenger banks.

RBS is required to deliver a series of initiatives to support challenger banks and the FinTech sector in the UK in lieu of the sale of RBS subsidiary Williams and Glyn.

As part of the state aid commitments agreed with the European Commission in 2009 and updated in 2014, RBS undertook to carry out five major divestments. Four have been successfully implemented; however one – the selling of the Williams and Glyn arm of RBS – has not. These new plans would replace the need for the sale, allowing RBS to retain the 300 branches it would otherwise have lost.

The previous package of measures worth £750 million will now incur an incremental charge of £50 million in relation to the revised package, and its implementation costs will be recorded in the RBS H1 2017 results, taking the total provision to £800 million.

RBS will also incur running costs for the duration of the scheme, which are estimated at around £35 million and will be substantially incurred before the end of 2019. Furthermore, under the terms of the revised package, should the uptake within the Incentivised Switching Scheme not be sufficient, RBS could be required to make a further contribution, capped at £50 million.

The revised package is focused on the following two remedies to promote competition in the market for banking services to small and medium enterprises (SMEs) in the UK:

• A £425 million Capability and Innovation Fund, to be administered by an independent body, that will grant funding to a range of competitors in the UK banking and financial technology sectors.

• An Incentivised Switching Scheme which will provide £275 million of funding for eligible challenger banks to help them incentivise SME customers of the business previously described as Williams & Glyn to switch their accounts and loans from RBS, paid in the form of ‘dowries’ to the receiving bank. An additional £75 million will be made available by RBS to cover customers’ costs of switching.

Ross McEwan, RBS CEO, said: “We welcome the progress that HM Treasury and the EC commissioner responsible for competition have made on agreeing an alternative package of remedies to increase competition in the SME marketplace. We await a formal decision on this proposal which would allow us to resolve our final state aid divestment obligation.”



Related Articles

Microsoft

Most read stories...
World Markets (15 minute+ time delay)
FTSE
7,700.96
-24.47
S&P 500
2,798.03
-4.53
Nikkei 225
23,763.37
-104.97