State Aid Funding Package
The concrete timelines in place for the Alternative Remedies Package
Since the 2008 financial crisis, the European Commission and UK government heads identified a need for RBS to no longer be ‘too big to fail’. This has ultimately led to the State Aid Funding Package, a relief for the challenger banks alas frustrated by its delays.
November 1 2018. The first day challenger banks can apply for a take from the RBS fund, mandated by the Banking Competition Remedies (BCR), that will attempt to diversify the SME lending market.
Delays through what is known as the State Aid Funding Package has understandably had challenger banks frustrated over a perceived lack of clarity, though a combination of London held seminars in September and a webinar in October provided by the BCR have attempted to provide as much information as possible.
As for when applications exactly open for the Capability and Innovation Fund side of the package, details are dependent on which of the four ‘Pools’, the challenger banks are looking to accept funding from. The November 1 date applies for Pools A and D, the largest and smallest of the Pools available.
"The dates have been a long time coming, and come only after a delay from a planned opening for applications in the summer”
Pool A is offering one grant of £120m, one grant of £100m, and one of £60m, with the aim: “To facilitate the development of more advanced business current account offerings and ancillary products for SMEs in the UK giving preference to beneficiaries with an established business current account offering.” Pool A closes for applications on December 31 2018.
Pool B is offering one grant of £50m and two of £15m, with the aim: “To facilitate the modernisation of existing business current account offerings or the development of new business current accounts or ancillary product propositions for SMEs in the UK.” Pool B opens for applications on February 1 2019, and closes March 29 2019.
Pool C is offering four grants of £10m, with the aim: “To facilitate the expansion of business offerings to include, lending or payments services to SMEs in the United Kingdom or international payments services to SMEs in the United Kingdom.” Pool C opens for applications on May 1 2019, and closes on June 28 2019.
Pool D is offering five grants of £5m, with the aim: “To facilitate the commercialisation of financial technology that is relevant to SMEs.” The Pool closes for applications on March 29 2019.
The Pool A awards are designated to be publicly announced in February 2019, though are yet without a firmer date than this. This applies to all sections (Pool B May of next year, Pool D in June) with Pool C not due to be announced until August 2019.
"The announcement of Pool C recipients comes almost two years after the package was first announced.”
As well as the lack of hard dates for when the money will be explicitly awarded, during the process there was also frustration by the challenger banks over the length of time taken in appointing the three board members overseeing the process. After the package was announced in September 2017, the third and final board member Aidene Walsh was not confirmed until July 2018. Walsh joined executive chair Godfrey Cromwell and executive director Brendan Peilow.
Across all categories a condition of entry is that the applicant is domiciled in the United Kingdom, the European Union, the European Economic Area or Switzerland.
The remainder of the money set aside is for the Incentivised Switching Fund, which RBS was obliged to provide after avoiding the mandated sale of its Williams and Glyn branches in 2017.
The Incentivised Switching Scheme opens for applications on November 5, and offers are due to go live on the RBS website on February 25 2019.