Nationwide eyes RBS fund in a bid to push into business banking
Britain’s biggest building society wants to break the big five’s dominance.
Nationwide plans to wade into the market for business banking by taking a slice of Royal Bank of Scotland’s challenger fund.
Britain’s biggest building society wants to launch a current account for smaller firms in an attempt to break the big five’s dominance of the financial space.
RBS has been forced by the European Commissions to set up a near-£800 million pot designed to spur competition while avoiding the sale of around 300 Williams & Glyn branches.
The package is split, with £425 million set aside to support challenger banks and fin-tech businesses and £350 million to help challenger banks convince small firms to switch from the state-backed lender.
Nationwide, has around 15 million customers and employs 18,000 staff, joins the likes of Virgin Money, Starling and Aldemore, which have all expressed an intent to claim a portion of the money.
Chief executive Joe Garner said: “We know there is demand for a Nationwide business current account, because at least 50,000 members ask us each year if we can help.
“This funding gives us a way to enter the market, serve society and meet our member needs several years before we would otherwise have re-considered it.
“We are already transforming the market in personal current accounts, winning more switchers than the big banks combined.
“Nationwide is the only market challenger with the scale, trust and track record to offer a compelling national alternative to the status quo that has reigned in business banking for over 20 years.”
Banking giants RBS, Barclays, HSBC, Lloyds and Santander hold around 85% of business accounts, according to market research specialist Mintel.
If its secures the funding, Nationwide will look to cater for the UK’s 5.7 million small companies and micro firms, including sole traders and owner-managed businesses.
Conservative MP Kevin Hollinrake, vice chairman of the All-Party Parliamentary Group on Fair Business Banking, welcomed the move.
He said: “High-profile business banking scandals have featured heavily in the press in recent years.
“It is worrying that there is now a growing crisis of confidence between our businesses and our banks.
“The market needs to be competitive in order to deliver the right solutions for small businesses, who are the backbone of our economy.”
Nationwide announced in February that underlying pre-tax profit rise 2% to £883 million for the nine months ending in December, boosted by the £26 million sale of its payments system VocaLink.