CLYDESDALE Bank owner Virgin Money has said it expects to sign up another 100,000 small and medium sized enterprise customers after winning support under a controversial scheme to boost competition in the sector.

Glasgow-based Virgin Money has been allocated £35m in the latest round of Banking Competition Remedies (BCR) awards.

The remedies programme was introduced to encourage SMEs to move their accounts from the former Royal Bank of Scotland group to other lenders, but has fallen well short of its targets.

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However, Virgin Money appears confident the £35m capacity-building funding it has been awarded will allow it to make significant advances in the key business banking market.

The group has made a commitment to BCR that it will attract 100,000 new SME customers by the end of 2025.

This will represent a 52 per cent increase on current SME customer numbers at the group, which also owns Yorkshire Bank.

Virgin Money expects to increase net lending to SMEs by an extra £2.2bn by the end of 2025.

The commitments reflect confidence that the Virgin Money brand will be a powerful tool in the business banking market, while also resonating with personal customers.

The group has decided to scrap the historic Clydesdale Bank name. This will disappear from branches early next year, along with the Yorkshire Bank name.

READ MORE: Clydesdale bank owner plans to close branches across Scotland as 100 job losses loom

In July Virgin Money came under fire after reactivating plans for widespread branch closures in Scotland, which it put on hold because of the coronavirus.

Virgin Money said the Banking Competition Remedies award was an endorsement of the group’s potential to shake up SME banking and would be used to accelerate its existing ambitious growth plans.

The group sees itself as a leading player in a cohort of challenger banks that aim to win market share from the giants that dominate the sector, such as RBS and Bank of Scotland owner Lloyds Banking Group.

It was created after the former Clydesdale and Yorkshire Bank Group (CYBG) merged with Virgin Money in 2018.

Gavin Opperman, group business banking director, said the group was investing in disruptive new capabilities and offering customers the best and most digitally-advanced business bank across the country. He said the Virgin brand was synonymous with entrepreneurship and business growth.

By way of example, the group will launch a service called Working Capital Health which it said represented an advance on the business current account. Mr Opperman said the service will provide working capital solutions to help SMEs optimise their cashflows and returns.

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The closures affecting seven Clydesdale Bank branches and five Virgin Money outlets in Scotland form part of a rationalisation programme expected to result in around 100 jobs losses in Scotland.

Plans for the closures were originally announced in February in a move linked to the process of integrating Virgin with CYBG.

BCR’s capability and innovation fund forms part of the Alternative Remedies Programme agreed in 2017 to help Royal Bank group comply with terms imposed by European regulators for agreeing to the £45 billion taxpayer bailout it received amid the global financial crisis in 2008.

Qualifying firms can be paid dowries of up to £50,000 to switch from Royal Bank group to one of 10 approved lenders. The group changed its name to NatWest Group in July.

READ MORE: 200,000 more firms offered dowries to switch from Royal Bank of Scotland group

It was expected the Incentivised Switching Scheme would encourage 120,000 SMEs to switch by the original deadline of August, which was extended in June. That month Banking Competition Remedies said around 41,000 SMEs had switched or were in the process of doing so.

Virgin Money group had £8.8bn of SME lending outstanding at June 30.