To encourage competition, regulators from the European Union has approved a British plan allowing bailed-out Royal Bank of Scotland to offer support to smaller alternative banks with funds around 835 million pounds ($1.1 billion) in total.
In July, the British government struck a deal with the European Commission for the plan, after the bank failed to sell business banking unit Williams & Glyn and after failing to satisfy one of the conditions of its 45 billion pound bailout.
The deal is important for the Royal Bank of Scotland as it ends the state aid commitments of the banks which is considered as a significant milestone on its path to recovery as well as the ability of the bank to pay dividends once more.
“The package targets a transfer of a 3 percent market share in the UK small- and medium-sized banking market from RBS to challenger banks,” said the European Union’s competition enforcer on Monday.
It was stated that the plan involves setting up an “incentivised switching scheme” and a “capability and innovation fund.”
It was announced that the Royal Bank Scotland that the funds would open in the first half of 2018. Ross McEwan, the chief executive, welcomed the approval from the European Union, saying that it will bring about clarity for the staff and the customers.
The state-owned lender has attempted and failed to sell Williams & Glyn in efforts to satisfy conditions of the European Union for its bailout at the height of the global financial crisis in the years 2008 and 2009.