Rangewell calls for Nationwide’s returned £50m to go towards COVID-19 effort
Nationwide revealed on Friday that it was abandoning its plans to enter the business banking market and therefore returning the £50 million given to it by the Banking Competition Remedies (BCR) Capability & Innovation Fund last year.
The lender’s CEO Joe Garner says: “COVID-19 has changed the medium-term interest rate landscape, meaning the business case for entering the market is no longer viable.”
Similarly, in February fellow UK lender Metro Bank returned £50 million from the same fund.
The BCR has said it will allow other lenders to apply for this £100 million in returned funds, but UK business finance specialist Rangewell has called for them to “be channelled to charities and healthcare businesses” to help with the handout of coronavirus relief throughout the country.
However, business finance firm Rangewell thinks it should go towards assisting small and medium-sized enterprises (SMEs) and charities struggling to cope in the midst of the coronavirus crisis.
“It is obvious to all observers that the well-meaning BCR package of measures so painfully drawn up after the failure of the RBS-Williams & Glynn demerger is no longer fit for purpose as SMEs and charities throughout the UK face unprecedented pressures on cash flow due to the COVID-19 crisis,” Rangewell says in a statement.
The firm says the BCR should hand the returned funds over to the Treasury “within days”, so it can relieve those healthcare services which have been forced to reduce hours or close altogether, such as dentists, opticians, pharmacies and vets, as well as help registered charities focused on sectors such as education, poverty alleviation, armed forces support and emergency services.
Rangewell says the funds could be channeled to charities and healthcare businesses through loans which are up to 10% of their 2019 turnover for a period of five years and interest free.
“It’s not even been a year since Nationwide was awarded the £50 million from the BCR fund to support SMEs and they have already abandoned their plans to finance small business at a time when they are most needed,” says Rangewell’s research head Nic Conner.
“Charities and healthcare businesses are the hidden backbone in ensuring the health and wellbeing of the nation – they don’t have time to be worrying about cash flow right now”.
Nationwide has said its business banking rethink will cost it roughly £70 million, with all staff who were working on the project to be redeployed elsewhere.
The returning of funds by the lender comes as UK Chancellor Rishi Sunak prepares to expand the government’s loan scheme, designed to help boost the amount lent to small businesses which are struggling to stay afloat amid the coronavirus epidemic.