Eleven lenders vie for a slice of £775m Royal Bank of Scotland competition fund

Eleven lenders including Monzo and Starling have been deemed eligible to take a slice of a £775m Royal Bank of Scotland fund aimed at increasing competition in Britain's banking sector.

RBS. Pic: Johnny Green/PA Wire

The banks will be entitled to a share of a £350m incentivised switching scheme aimed at encouraging small business customers to ditch their RBS account for rivals.

RBS is freeing up the cash as part of conditions attached to its £45bn Government bailout at the height of the financial crisis, and the money is being distributed by the Banking Competition Remedies body.

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As well as Monzo and Starling, Arbuthnot, Clydesdale, Co-op Bank, Hampden & Co, Metro Bank, Nationwide, Santander, Handelsbanken and TSB have also been approved.

They will make offers to SME customers at RBS in February.

A further four unnamed firms, which are not currently members of the current account switching service, were also approved and the BCR is considering a second application window in late spring 2019.

BCR chairman Godfrey Cromwell said “It’s very good news that a broad selection of organisations have stepped forward and made a diversity of offers right across the SME client base. Today’s announcement marks an important milestone for incentivised switching.

“Customers will be the real decision-makers here. We look forward to getting through the contracting stage and seeing these offers made public so that customers can react.

“We anticipate that a further application round in quarter two 2019 will widen the range of offers still further.”

Bidding for participation in a separate £425 million Capability and Innovation Fund - aimed at helping banks develop their current account, lending and payments offerings for business customers - is also under way.

While the process has been marred by delays - having been put nearly six months behind schedule earlier this year - directors insist the BCR is now on track to deliver the distribution of the fund along a stringent timeline.