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RBS £775m competition scheme setback blamed on executive hiring delays

RBS has been forced to put up £775m towards a scheme to boost banking competition after failing to sell off its branch network 
RBS has been forced to put up £775m towards a scheme to boost banking competition after failing to sell off its branch network

The independent body set up to oversee a £775m scheme bankrolled by RBS to boost competition in the small business banking market promised to start handing out cash in February after challenger banks that it was set up to benefit complained of delays.

The scheme, overseen by the Government as part of conditions attached to RBS’s £45bn taxpayer bailout, had been due to launch in the first part of this year but has been pushed back by several months after it struggled to hire senior staff in time.

Several challengers including Santander, Starling, Metro Bank and CYBG have been preparing bids for the cash, but a number have complained of being left in the dark and out of pocket because of the delays.

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"We worked liked hell to get... ready," one executive told the Press Association. Their bank had begun to prepare for the scheme last September, they said, but in the months that followed, "communication has been threadbare".

Another challenger bank boss complained of the costs of waiting.

Metro
Metro Bank is among the challengers expected to apply for the funding

Several tranches worth a combined £425m will be handed out as part of a “Capability and Innovation Fund” which will finance challengers that want to improve the quality of their services and develop new forms of financial technology. The rest will be used to incentivise small business customers to switch their accounts away from RBS.

Applications for both schemes were originally meant to open in the first half of 2018 and the initial funds were supposed to be distributed by the end of the year.  

But the Banking Competition Remedies body said it would now open applications in November and start handing out cash in February after two of its senior directors, Godfrey Cromwell and Brendan Peilow, were appointed later than expected, in April.

RBS timeline - back from the brink
RBS timeline - back from the brink

It also revealed the appointment of Aidene Walsh, currently boss of the Fairbanking Foundation, as chief executive.

RBS has been forced to put up the cash after backing out of plans to spin off a big chunk of its branch network under the Williams & Glyn brand, which it had previously phased out in 1985.

Anne Boden, Starling Bank’s chief executive, said she welcomed the news, adding: “We've had a dedicated team working on our application for months and have been keenly waiting for clarity on the timing.”  

CYBG spent £5m getting ready for the scheme in the six months to March 31 and in April Metro Bank revealed it had spent £590,000 last year on preparing to apply after saying it hopes to clinch £120m in funding.

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