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Brussels agrees plan with RBS to boost banking competition

RBS-Building-2012-700x450.jpgThe European Commission revisits the conditions it imposed on the bank after its financial crisis bailout.

A plan to resolve RBS’s final £835m state aid commitment has been agreed by the UK Government and the EU Commission.

RBS will fund measures to improve the UK business banking market and boost competition. The measures will also help address distortions in the UK business banking market that came out of RBS’s state bailout.

RBS will pay for a £425m fund made up of 15 grants for challenger banks and other financial services business to boost their business banking offerings. The grants will range from £5m to £120m and the fund will be overseen by an independent body.

The bank will also pay £350m in funding to incentivise 120,000 SMEs to switch their accounts from the former Williams & Glyn to its competitors.

That funding will be split into £225m paid to competitors to encourage consumers to switch to their business accounts, £50m to carry out the switching, and £75m set aside by RBS to cover customers’ switching costs.

RBS will also put £60m towards other costs related to the measures.

Economic secretary to the Treasury Stephen Barclay says: “The announcement today will help boost competition in the business banking market and marks another significant milestone in resolving a major legacy issue at RBS.”

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