One of Britain’s biggest lenders, Nationwide Building Society (NBS) is abandoning plans to enter the business banking market, stating that the Coronavirus (COVID-19) pandemic has made it commercially unviable. In one of the first major strategic shifts to be announced by a British lender in response to the outbreak, NBS said on Friday that the impact of the virus had made business banking unappealing.
The Chief Executive Joe Garner, in a statement said, “COVID-19 has changed the medium-term interest rate landscape, meaning the business case for entering the market is no longer viable.” The society said NBS would return a 50 million-pound (61.9 million dollars) grant from a fund set up to foster competition among British banks and improve business banking.
“The rethink on business banking will cost Nationwide about 70 million pounds and all staff working on the project will be redeployed elsewhere,’’ it said. The short-lived foray into business banking began on May 2019, when Nationwide was awarded the grant from the Banking Competition Remedies (BCR) scheme that was set up to help lenders to wrest business from established rivals.
Nationwide is the second lender to scale back its ambitions after Metro Bank (MTRO.L) said it would return 50 million pounds of its grant while continuing to try to deliver part of its business banking plans. The BCR separately announced that it would allow other lenders to apply for the 100 million pounds returned by Nationwide and Metro.
The news came as Britain’s Finance Minister Rishi Sunak prepared an expansion of a government loan scheme designed to boost lending to small businesses that are struggling because of the coronavirus epidemic. Report says that initiative follows warnings from the Corporate Finance Network of accountants that up to 18 per cent of all small and medium-sized businesses are at risk of imminent collapse.