Alternative Remedies Package
In 2009, the European Commission approved a number of state aid measures granted to The Royal Bank of Scotland Group plc (“RBS”). This approval was given on the basis of a restructuring plan submitted by RBS and a number of commitments given by the UK Government in 2009 and subsequently amended in 2014, including the divestment of a part of RBS’ branch-based retail and small and medium-sized enterprise (“SME”) business, which later became known as ‘Williams and Glyn’ (the “Divestment”).
As a result of considerable challenges in achieving the Divestment, the UK Government proposed substituting the 2014 commitments with a revised package of measures with the aim of achieving the objective of promoting competition in the market for banking services to SMEs that lay behind the Divestment. The Alternative Remedies Package was agreed in principle in July 2017 and formally approved by the European Commission on 18 September 2017.
The Alternative Remedies Package
The package consists of two elements:
- £425m Capability & Innovation Fund to provide grants to Eligible Bodies to help them improve their banking capabilities for Small and Medium-sized Enterprises; and
- Up to £275m for an Incentivised Switching Scheme to provide funding to Eligible Bodies, in order to incentivise RBS’s Williams and Glyn SME banking customers to switch their business current accounts to the Eligible Bodies.
Incentivised Switching Scheme
The purpose of the Incentivised Switching Scheme is to provide funding of up to a maximum of £275 million to Eligible Bodies to use as incentives to encourage SME banking customers (with an annual turnover of £25 million or less) of the business previously described as Williams & Glyn (the “Relevant Customers”) to switch their business current accounts and loans to the Eligible Bodies; £225 million of the fund is available in “dowries” with respect to any Relevant Customers that agree to transfer their business current account. £50 million will be available for loan related dowries.
Capability and Innovation Fund
The purpose of the Capability and Innovation Fund is to encourage Eligible Bodies to:
- develop and improve their capability to compete with RBS in the provision of banking services to SMEs; and
- develop and improve the financial products and services which are available to SMEs.