(Alliance News) - Royal Bank of Scotland Group PLC is lagging behind its deadline to offload 120,000 of its business banking customers, the Financial Times reported on Monday morning.
According to the newspaper, the bank is "months behind schedule" in its incentivised switching scheme - designed by regulators to shrink its dominance in the realm of business banking.
Under the scheme, agreed in 2017, RBS was required by the UK government and the EU to put GBP350 million into a specialised fund. This money is available to rival lenders so they can offer incentives to small and mid-sized businesses to tempt away RBS customers.
RBS's deadline for offloading a minimum of 120,000 customers is August 2020.
The FT, however, noted that: "Despite paying dowries of up to GBP50,000 per customer, only about 18,000 businesses moved in the first seven months of the 18-month programme, according to three people briefed on the figures."
Moreover, "executives at several banks" told the FT that "switching rates had only increased from a very low base, far behind the levels required to hit the programme's targets".
However, the FT did cite Banking Competition Remedies Chair Godfrey Cromwell as disagreeing with this assessment.
Cromwell was quoted as saying: "Initial take-up has been good and the number of switches represent a significant increase in historic switching rates for this sector."
Banking Competition Remedies can opt to extend the incentivised switching scheme another 12 months past the August deadline and compel RBS to expand the pool of potential customers up for grabs by rivals. However, RBS faces an up to GBP50 million fine if these additional measures fail.
An RBS spokesperson told the FT: "We are committed to delivering the scheme successfully and continue to work with participating banks as part of our commitment to increasing competition in the UK business banking sector."
https://www.ft.com/content/2eebbbdc-fe36-11e9-be59-e49b2a136b8d
Shares in RBS were up 0.8% at 216.30 pence in London on Monday morning.
By Anna Farley; annafarley@alliancenews.com
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