Blow for CYBG as bank snubbed in investment round from the RBS
YORKSHIRE BANK’S parent company CYBG has been dealt a blow following the news that it has not been awarded any funding from Pool A of the RBS alternative remedies package.
Analysts had forecast the group would be a front runner in the bidding, especially following its takeover of Virgin Money.
Analyst Gary Greenwood at Shore Capital said the failure to win an award will come as a blow to CYBG’s investment case.
Instead, Metro Bank, Starling and ClearBank were successful in their bids to win a combined £280m from the RBS’s capability and innovation fund. This is part of the alternative remedies package imposed on RBS as a condition of its £45bn Government bailout at the height of the financial crisis.
CYBG said it will now compete strongly in the incentivised switching scheme that goes live on February 25. CYBG said it intends to offer an attractive home to former Williams & Glyn SME customers who are being encouraged to leave RBS.
The capability and innovation fund is separate from the incentivised switching scheme.
The firm said: “CYBG has a strong position in the UK SME market and will continue with its successful existing SME growth strategy.”
The capability and innovation fund was established to increase competition in the UK’s SME banking market.
CYBG’s chief executive, David Duffy, said the group put forward the strongest possible case to explain how large scale additional investment in its SME business would accelerate its ability to increase the scale of its business and make it a more effective competitor than any other eligible Pool A bank.
Metro won the largest share of the first pool of the grant with £120m, followed by digitalonly bank Starling with £100m and then £60m for ClearBank, which applied for the grant with partner Tide.
Further grants for other pools of the fund will be awarded later this year.
RBS’s £775m alternative remedies package is being distributed by the Banking Competition Remedies body.