LONDON (Reuters) – Nationwide Building Society, one of Britain’s biggest lenders, is abandoning plans to enter the business banking market, saying the coronavirus epidemic has made it commercially unviable.
In one of the first major strategic shifts to be announed by a British lender in response to the outbreak, Nationwide said on Friday that the impact of the virus had made business banking unappealing.
“COVID-19 has changed the medium-term interest rate landscape, meaning the business case for entering the market is no longer viable,” said Chief Executive Joe Garner.
Nationwide will return a 50 million pound ($61.9 million)grant from a fund set up to foster competition among British banks and improve business banking, the society said.
The rethink on business banking will cost Nationwide about 70 million pounds and all staff working on the project will be redeployed elsewhere, it said.
The short-lived foray into business banking began last May, when Nationwide was awarded the grant from the Banking Competition Remedies (BCR) scheme that was set up to help lenders to wrest business from established rivals.
Nationwide is the second lender to scale back its ambitions after Metro Bank <MTRO.L> said it will return 50 million pounds of its grant while continuing to try to deliver part of its business banking plans.
The BCR separately announced that it will allow other lenders to apply for the 100 million pounds returned by Nationwide and Metro.
The news comes as Britain’s Finance Minister Rishi Sunak prepares an expansion of a government loan scheme designed to boost lending to small businesses that are struggling because of the coronavirus epidemic.
That initiative follows warnings from the Corporate Finance Network of accountants that up to 18% of all small and medium-sized businesses are at risk of imminent collapse.
(Reporting by Lawrence White; Editing by David Goodman)