Challenger banks still await RBS funding

CHALLENGER bank bosses have aired frustration over months of delays to a £775 million fund meant to boost competition, with firms being left out of pocket and in the dark over the application process.

The cash will come from Royal Bank of Scotland, as part of conditions attached to its £45 billion Government bailout during the financial crisis.

Smaller banks such as Metro, Starling, TSB and CYBG have been scrambling to prepare bids for the funding after the Government said the application process would launch in the first half of 2018, but lenders have yet to be given any further clarity on how to even apply.

A switching scheme – which will encourage SME customers to ditch their RBS account for rival banks – was also meant to begin in the first half, but has yet to launch.

“We worked liked hell to get... ready,” one executive privately told the Press Association, explaining that preparations were launched in earnest last September.

But in following months, “communication has been threadbare”.

“It’s costing us money,” another challenger bank boss disclosed.

One CEO explained that their bank had hired extra people to prepare for a raft of new SME customers who would be encouraged to switch their accounts from RBS as part of the incentive scheme.

They had hoped that details would be provided by the end of June, but are still waiting for the release of bid documents that will shine a light on the format, structure and eligibility requirements.

Anne Boden, chief executive and founder of digital bank Starling, said: “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,” she warned.

Challenger Metro Bank said in April that it had spent £590,000 last year preparing its application, having publicly said it hopes to clinch £120 million in funding to take a larger slice of the business banking market.

Those costs pale in comparison to the £5 million spent by CYBG in the six months to March 31 alone, according to its interim results released in May.

Other banks expected to put forward bids, including Starling, TSB and Santander, have not publicly disclosed those figures.

Around £775 million is up for grabs as part of conditions attached to RBS’ bailout after the state-backed lender scrapped plans to sell off its 300-strong Williams & Glyn branch network.