Banking Competition Remedies

Today I am standing down as the Chair of Banking Competition Remedies. I am immensely proud of what we achieved. But now BCR is approaching the end of its life and will commence winding down next year. See the latest press announcement here:?https://bcr-ltd.com/wp-content/uploads/2023/08/BCR-CIF-quarterly-update_Aug-v1.0.pdf

In my view there is no doubt that the totality of the Alternative Remedies Package (ARP) has achieved its objective of increasing competition in the SME banking market. The CIF scheme leveraged considerable additional funds into the development of new products and acted as a catalyst in raising significant further investment into the UK.

I would particularly draw attention to three key successes:

·???????Competition:?BCR was established to rectify issues in respect of state aid following the Global Financial Crisis with a principal objective of enabling effective competition in the SME banking market.?An impressive 30% of SMEs now hold banking relationships with CIF awardees?including those which transferred under ISS. The consequence of that is there is now real competition with the established big banks who formerly dominated the sector.

·???????Growth: BCR made grant awards under the CIF scheme of ￡425m. As a condition of those awards, we agreed co-investment of ￡560m from awardees. Of note, since being awarded CIF funds, a further ￡2.8bn of Private Equity investment has been made into those companies.

·???????Innovation: The 21 CIF awardees have transformed digital offerings, including introducing over 250 new products that have democratised access to business tools and financial products, enhanced and integrated FinTech ecosystems including new platform models, closed the funding gap for SMEs through alternative finance and have greatly improved the financial health of SMEs through new partnerships, relationships, and integrations. This has supported a significant portion of the fantastic success of FinTech in the UK over the last couple of years.

To move the dial on competition for SMEs in the UK financial services market was always a substantial ambition. BCR has sought to address it through a broadly-based portfolio of participants and awardees stimulating choice for businesses in addressing their needs for financial services. It is a given that in making awards to some applicants, and inevitably rejecting even more applicants, we were never going to please everyone. Nor were we able to guarantee success in every case. In my view, it is a testament to the quality of awardees of CIF funds that they have remained focused on delivery in spite of some particularly challenging and unprecedented headwinds over the last years. They have challenged the status quo in the provision of financial services to UK SMEs and in many cases are now partnering with more traditional providers to provide SMEs with enhanced offerings. BCR awards have been utilised positively and have contributed significantly towards the healthy position in which both FinTech and SME banking providers find themselves today. This will be the lasting legacy of BCR and the ARP of which all involved will be justifiably proud in the future.?

I hope that the Treasury, which negotiated the ARP with the European Commission and NatWest, are as proud as we are in having delivered this result for British SMEs. In our view the success of BCR represents a case study of how targeted interventions such as the ARP can boost the competitive landscape for the benefit of customers. And of course, not to forget, that the completion of the ARP represents the opportunity for NatWest to remove the contingent liability in respect of State Aid penalties hanging over them since the Global Financial Crisis.

On a personal level, I would like to thank all of those who worked in BCR and also our partners, those involved in the ISS and grant awardees from CIF. You all know who you are!

Finally, I’ll be letting you know what’s next for me in the coming weeks and months – some amazing opportunities that I am excited to be taking up! Watch this space…