Nationwide scrap plans on business banking debut over coronavirus
(1 April 2020 – United Kingdom) Nationwide have announced that all plans to enter the British business banking market have been scrapped as a result of the coronavirus crisis.
The bank argues that the recent coronavirus outbreak in the United Kingdom (UK) has resulted in this new banking initiative to no longer have any commercial viability. Part of this is due to the Bank of England’s (BoE) decision to cut based interest rates to a historical low of 0.1 percent meaning that banks will earn less interest on their lending.
The bank will now have to return a GBP50 million grant from a pool of RBS cash intended to simulate competition among British banks. In addition to this, the banks will also have to pick-up a bill of GBP70 million as a result of their sudden change of mind due to the staffing and infrastructure costs.
“COVID-19 has changed the medium-term interest rate landscape, meaning the business case for entering the market is no longer viable. As a consequence of its decision, Nationwide will cease activity directly related to its proposed market entry” stated Nationwide CEO, Joe Garner.