Embattled TSB has walked away from a £775 million government scheme to improve competition in business banking, in the latest blow to a process insiders increasingly describe as “shambolic”.
On Tuesday the Banking Competition Remedies board will announce the latest recipients of funds from Royal Bank of Scotland as part of the terms of its 2008 government bailout.
Pots of £50 million and two of £15 million are available for challenger banks to shake up business banking.
TSB has endured an awful year with a massive computer meltdown leading to the departure of chief executive Paul Pester.
Under new chief executive Debbie Crosbie it has now walked away from the BCR funds process. Rivals say that it is because it didn’t want to risk the embarrassment of losing out to much smaller banks again.
Many banks have also said privately that the process has been a waste of executive time.
The process already ran into trouble when the first round of awards saw the favourites, including TSB and CYBG, snubbed in favour of Starling, Metro and Tide.
But the awards were seen as problematic due to an apparent conflict of interest at Starling, an accounting scandal at Metro and industry criticism of Tide for being no more than an IT platform without a banking licence.
CYBG is believed to have made a bid but has been briefing investors that it does not expect to win.
That leaves likely winners from the “pool B” money as Nationwide, Monzo, and a host of other smaller lenders that don’t yet offer business banking.
Bankers say the entire BCR process, led by Aidene Walsh and chairman Godfrey Cromwell, has been chaotic.
They say it has been impossible to understand on what basis awards are made, with the BCR seemingly swayed by unrealistic promises of growth from small players with little track record.
TSB said: “TSB is making a significant move in business banking through a multi-million pound investment. We offer fair and good-value business products with both online and face-to-face service across our national branch network.
“We’re already part of the BCR’s Incentivised Switching Scheme but have decided not to apply for further rounds of Capability and Innovation funding.”
The BCR said: “We seek to be as open and clear as possible in our dealings and processes.”
