NATIONWIDE Building Society has shelved plans to enter the business banking market amid the fallout from the coronavirus crisis.

The giant, which is owned by its members, said it no longer expected the move to be commercially viable as a result of the impact of the Covid-19 virus and associated changes to its interest rate assumptions.

The Bank of England cut the base rate to a record low of 0.1 per cent last month to try to limit the damage caused to the economy.

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Nationwide chief executive Joe Garner said: “Covid-19 has changed the medium-term interest rate landscape, meaning the business case for entering the market is no longer viable.”

He said Nationwide’s absolute focus would be on supporting its members and employees through the immediate difficult time and future financial implications of the virus.

It made the decision as banks across the UK try to respond to the massive economic dislocation resulting from the spread of the coronavirus. This has left many businesses facing serious cashflow problems.

Nationwide said it will return a £50 million grant it was awarded under a scheme designed to help firms win customers from Royal Bank of Scotland group to encourage competition in the small and medium sized enterprise market.

Nationwide was one of the biggest beneficiaries of the Banking Competition Remedies (BCR) programme.

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This was launched in 2017 under the £775 million alternative remedies programme agreed by Royal Bank group and the UK Government with competition regulators.

In February Royal Bank announced plans to change its group name to NatWest Group.

Nationwide was awarded funding under an initiative to help develop the capabilities of new players in the business banking market and to encourage innovation.

Banking Competition Remedies is also funding a scheme under which firms can be paid dowries of up to £50,000 to switch to one of 12 qualifying banks. These include Virgin Money-owned Clydesdale Bank.

BCR said yesterday that banks will be able to speed up payments to some companies that switch.

Firms with turnover of more than £1m previously had to wait 12 months to receive all of their dowries. They will be eligible to receive the full amount at the time they make the switch in future.

BCR will invite other banks to apply for the £50m returned by Nationwide and £50m that Metro Bank refunded. Metro Bank scaled back its expansion plans after an accounting error in January left it short of capital.

“Our awardees are delivering competitive and valuable solutions at a time of great challenges for SMEs and those who serve them,” said BCR.

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