{"id":82999,"date":"2017-07-26T15:37:00","date_gmt":"2017-07-26T15:37:00","guid":{"rendered":"http:\/\/mostafa.openonline.co.uk\/?guid=a82c2e58a39a692f962f743f026c6355"},"modified":"2017-09-18T16:00:23","modified_gmt":"2017-09-18T16:00:23","slug":"news-story-agreement-reached-on-rbs-state-aid-will-boost-competition-in-business-banking","status":"publish","type":"post","link":"https:\/\/mostafa.openonline.co.uk\/?p=82999","title":{"rendered":"News story: Agreement reached on RBS\u2019 State aid will boost competition in business banking"},"content":{"rendered":"<p><em>Updated:<\/em> Link to alternative remedies package guidance added<\/p>\n<div class=\"govspeak\">\n<div class=\"call-to-action\">\n<p>The alternative remedies package has now been formally approved by the European Commission, please <a href=\"https:\/\/www.gov.uk\/government\/publications\/rbs-state-aid-alternative-remedies-package\">read the guidance<\/a> for further information.<\/p>\n<\/div>\n<p>A plan to resolve <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr>\u2019 final State aid commitment, worth approximately \u00a3835 million, has been agreed in principle between the UK Government and Commissioner Vestager of the EU Commission.<\/p>\n<p>It will see <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> fund and deliver <a href=\"https:\/\/www.gov.uk\/government\/news\/uk-government-proposes-new-approach-to-boost-banking-competition-and-resolve-rbs-state-aid-commitments\">a package of measures<\/a> to improve the UK business banking market and is designed to boost competition, helping small and medium sized enterprises (SMEs) benefit from greater choice and offers on banking services.<\/p>\n<p>The measures will also help address potential distortions in the UK business banking market that resulted from state support for <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr>.<\/p>\n<p>Following market testing and responses to the Commission\u2019s consultation, the government enhanced the package of measures announced in February this year to make sure that it delivers its pro-competitive objectives and is equivalent to the divestment of Williams &amp; Glyn, as mandated in 2009.<\/p>\n<p>The revised package consolidates the previously announced remedies into two enhanced measures:<\/p>\n<ul>\n<li>a \u00a3425 million Capability &amp; Innovation Fund, administered by an independent body, comprised of 15 grants that eligible challenger banks and other financial services providers can compete for to increase their business banking capabilities. These awards will range from \u00a35 million to \u00a3120 million.<\/li>\n<li>\u00a3350 million of funding to incentivise SMEs to switch their accounts from the business previously described as Williams &amp; Glyn to eligible challengers, comprised of \u00a3225 million paid in the form of \u201cdowries\u201d to challengers to use to incentivise SMEs to switch their business current accounts, \u00a350 million to facilitate the switching of related loans, and \u00a375 million set aside by <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> to cover customers\u2019 switching costs. This fund is intended to facilitate the switching of 120,000 (3%) SMEs and includes safeguards to maximise the likelihood of achieving this target (including the possibility of extending the scheme outside the Williams &amp; Glyn customer base in certain circumstances).<\/li>\n<\/ul>\n<p><abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> will also fund c. \u00a360 million of additional implementation and other costs.<\/p>\n<p>Full details of the remedies, including precise eligibility criteria for challengers, will be announced in the autumn.<\/p>\n<p>The UK Government will now work with the Commission to formalise the revised plan, including the next steps on implementation.  On this basis and subject to the support of the College of Commissioners, the Commission will adopt its formal decision under EU State aid rules in the autumn.<\/p>\n<p>The Economic Secretary to the Treasury, Stephen Barclay said:<\/p>\n<blockquote>\n<p>The announcement today will help boost competition in the business banking market and marks another significant milestone in resolving a major legacy issue at <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr>.<\/p>\n<p class=\"last-child\">It builds on the recent settlement with the Federal Housing Finance Agency and together they show the progress being made to resolve <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr>\u2019s outstanding issues.<\/p>\n<\/blockquote>\n<h2 id=\"further-information\">Further information<\/h2>\n<h3 id=\"why-has-the-package-changed\">Why has the package changed?<\/h3>\n<p>The proposed package announced in February comprised four elements:<\/p>\n<ul>\n<li>a fund, administered by an independent body, that eligible challenger banks can access to increase their business banking capabilities<\/li>\n<li>funding for eligible challenger banks to help them incentivise SMEs to switch their accounts from <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> paid in the form of \u201cdowries\u201d to challenger banks to use to incentivise switching<\/li>\n<li>\n<abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> granting business customers of eligible challenger banks free access to its branch network for cash and cheque handling for up to 3 years, to support the measures above<\/li>\n<li>an independent fund to invest in fintech to support the business banking of the future<\/li>\n<\/ul>\n<p>In March and April HM Treasury undertook a private market testing exercise speaking to challengers, other financial institutions (including fintechs) and SMEs. At the same time the Commission carried out its own public consultation. The government listened to the feedback received from the industry and have used it to make a series of enhancements that will further improve the impact the package has on competition in the SME banking market.<\/p>\n<p>Funding for free branch access has been redistributed to the Incentivised Switching Scheme as feedback showed this would have a greater impact on competition. Similarly, the Innovation Fund has been reallocated to a combined Capability and Innovation Fund to maximise the immediate impact on competition. There was also strong feedback indicating that the incentives to encourage the customers in the Williams &amp; Glyn pool to switch to challenger banks would need to be significantly increased. This is why the Incentivised Switching Scheme has been increased.<\/p>\n<p>The revised package now comprises two elements:<\/p>\n<ul>\n<li>\n<p>a \u00a3425 million Capability &amp; Innovation Fund, administered by an independent body, comprised of 15 grants that eligible challenger banks and other financial services providers can compete for to increase their business banking capabilities. These awards will range from \u00a35 million to \u00a3120 million.<\/p>\n<\/li>\n<li>\n<p>\u00a3350 million of funding to incentivise small and medium sized enterprises (SMEs) to switch their accounts from <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> to eligible challengers, comprised of \u00a3225 million paid in the form of \u201cdowries\u201d to challengers to use to incentivise SMEs to switch their business current accounts, \u00a350 million to facilitate the switching of related loans, and \u00a375 million set aside by <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> to cover customers\u2019 switching costs.<\/p>\n<\/li>\n<\/ul>\n<table>\n<thead>\n<tr>\n<th>Original Measures<\/th>\n<th>Original Costs<\/th>\n<th>Revised Measures<\/th>\n<th>New Costs<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>A.\tCapability Fund<\/td>\n<td>\u00a3300m<\/td>\n<td>1. Capability and Innovation Fund<\/td>\n<td>\u00a3425m<\/td>\n<\/tr>\n<tr>\n<td>B.\tIncentivised Switching Scheme<\/td>\n<td>\u00a3175m<\/td>\n<td>\u00a0<\/td>\n<td>\u00a0<\/td>\n<\/tr>\n<tr>\n<td>C.\tBranch Access<\/td>\n<td>\u00a345m<\/td>\n<td>2. Incentivised Switching Scheme<\/td>\n<td>\u00a3350m<\/td>\n<\/tr>\n<tr>\n<td>D.\tInnovation Fund<\/td>\n<td>\u00a3200m<\/td>\n<td>\u00a0<\/td>\n<td>\u00a0<\/td>\n<\/tr>\n<tr>\n<td>Total measures costs<\/td>\n<td>\u00a3720m<\/td>\n<td>Total measures costs<\/td>\n<td>\u00a3775m<\/td>\n<\/tr>\n<tr>\n<td>Total costs (includes running costs)<\/td>\n<td>\u00a3758m<\/td>\n<td>Total costs (includes running costs)<\/td>\n<td>\u00a3833m<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3 id=\"rbss-state-aid-requirements\">\n<abbr title=\"Royal Bank of Scotland\">RBS<\/abbr>\u2019s State aid requirements<\/h3>\n<table>\n<thead>\n<tr>\n<th>Divestment Commitment<\/th>\n<th>Status<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>\n<abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> Insurance (Direct Line Group)<\/td>\n<td>Complete (February 2014)<\/td>\n<\/tr>\n<tr>\n<td>Citizens Financial Group (not an original divestment obligation, but added to the revised EC term sheet in 2014)<\/td>\n<td>Complete (October 2015)<\/td>\n<\/tr>\n<tr>\n<td>Global Merchant Services (Worldplay)<\/td>\n<td>Complete (November 2010)<\/td>\n<\/tr>\n<tr>\n<td>\n<abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> holding in Sempra<\/td>\n<td>Complete (May 2011 \u2013 when the last Sempra related assets had been sold)<\/td>\n<\/tr>\n<tr>\n<td>Williams &amp; Glyn business (original decision in 2009)<\/td>\n<td>To be replaced by alternative remedies package<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3 id=\"other-commitments\">Other commitments<\/h3>\n<p>In addition, there were a number of behavioural commitments <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> had to meet. There have been no violations by <abbr title=\"Royal Bank of Scotland\">RBS<\/abbr> of these commitments.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A plan to resolve RBS\u2019 final State aid commitment has been agreed in principle between the UK Government and the EU Commission.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"_links":{"self":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/82999"}],"collection":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=82999"}],"version-history":[{"count":1,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/82999\/revisions"}],"predecessor-version":[{"id":84527,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/82999\/revisions\/84527"}],"wp:attachment":[{"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=82999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=82999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mostafa.openonline.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=82999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}