Britain's Metro, Starling, ClearBank win cash to fund small businesses

Britain's Metro, Starling, ClearBank win cash to fund small businesses

Britain's Metro, Starling, ClearBank win cash to fund small businesses

The grant comes from a €890 million fund created as a condition on RBS for accepting a €52 billion bailout during the financial crisis.

The bank has pledged to use the money to create 398 new jobs in the United Kingdom and to invest €109 million of its own money to help build a better bank for SMEs.

It said that will make £913 million of balance sheet lending available to SME customers by the end of 2023 and that aims to capture 6.7% of the business banking market within five years.

What is worth noting is that today's seemingly positive response - Metro Banks shares have rallied 5% to £13.69 - adds only £63.5m to Metro's market value, implying a fairly lukewarm response overall.

Starling's successful application marks a turning point in Britain's banking industry.

Metro won the largest share of the first pool of the grant with £120 million, followed by digital-only bank Starling with £100 million and then £60 million for ClearBank, which applied for the grant with partner Tide.

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The funds from the Banking Competition Remedies (BCR) scheme that was set up a year ago seek to help startups and online-only banks wrest business from established rivals such as Royal Bank of Scotland (RBS), Lloyds and Barclays. Starling built its banking platform from scratch and has a strong track record for innovation. "We already provide tens of thousands of businesses with market-leading service and convenience, and these funds will enable us to introduce new services and products for more SME customers across the country".

"Starling Bank is delighted to have received this award", said Anne Boden, Starling's founder and CEO.

ClearBank, through its partnership with business banking provider Tide, said it would "revolutionise" the SME market.

Other unsuccessful claimants for this fund included Arbuthnot, Co-op Bank, Handelsbanken, Monzo and TSB, though they are all still able to participate in the Incentivised Switching Scheme that goes live next Monday, with customers of former RBS subsidiary Williams & Glyn being encourages to switch their business current accounts to "challenger" banks.

"It will help us bring much-needed competition to the underserved SME hotspots in the North while investing in our digital capabilities and creating new jobs".

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