Royal Bank of Scotland Group’s (LON:RBS) £425 million ‘challenger‘ fund’s grant policy has come under attack from new lenders and politicians, The Times has reported. The lender, bailed-out by the UK government, will set up the scheme as part of an alternative plan to avoid the forced sale of its Williams & Glyn branches.
RBS’ share price has been little changed in London in today’s session and as of 10:30 BST, stood at 275.40p, flat in percentage terms, largely in line with the broader market, with the benchmark FTSE 100 index currently standing 0.05 percent higher at 7,537.95 points. The group’s shares have added more than 55 percent to their value over the past year, and are up by some 22 percent in the year-to-date.
RBS fund under attack
The Times reported today that there was widespread anger among new lenders that RBS’ proposed challenger fund will allow Spain’s Santander to apply for a grant to support business lending, even though it is one of Europe’s biggest banks. If successful, the move essentially would mean that British taxpayers would be funding Santander, with the FTSE 100 group still more than 70 percent-owned by the taxpayer.
The eligibility criteria include a requirement for applicants to have assets of less than £350 billion in the UK. Santander has £300 billion, prompting suspicions that the bar was set to let it in.
The newspaper quoted Nicky Morgan, chairwoman of the Treasury select committee, as commenting that the fund was meant to boost competition.
“Payouts from RBS to another large and established bank would risk defeating that objective,” she pointed out.
Bailed-out lender defends policy
An RBS spokesman meanwhile told The Times that the lender believed that the new measures would help boost competition in the small companies “marketplace and that a wide range of banks and smaller fintech players will benefit from them”.