Nationwide Building Society, not to be confused with U.S. insurance giant Nationwide, announced that it applied for a grant worth more than $67 million from rival Royal Bank of Scotland (RBS).
It’s part of RBS’ more than $1 billion in disbursements it has been forced to dole out in an effort to increase industry competition. If Nationwide receives the grant, it will launch a business current account and join an increasingly competitive business financial services market.
Nationwide posted a 7 percent drop in annual profits, compelling the firm to broaden its offerings, reports said; its latest earnings posted $1.3 billion in profits, down from $1.4 billion a year prior, making 2017 the second year in a row of declining profits.
“Historically, the cost of entry in this market was so high we couldn’t look our members in the eye and say this is going to pay them back,” said Nationwide Chief Executive Joe Garner, “but if we are successful in securing the funding from the remedies package, that problem goes away.”
The European Commission will require RBS to release the funds to new market entrants; issuance of the grants is managed by House of Lords member Godfrey Cromwell, who was appointed to lead the Banking Competition Remedies body, according to reports.
Nationwide said that it would target small businesses with its business banking services.
The company pointed to debt buybacks and low interest rates driving competition in the mortgage industry as factors behind its profit decline.