The Co-op Bank is one of three banks (along with Nationwide and Investec) to win grant funding as part of the 'state aid remedy' for the government bail-out of RBS.
The grant of £15m will be used to reinforce the Co-op's proposition for SMEs - including improved digital service.
The bank has emphasised to the Customer Union that this grant will help it strengthen the proposition to cooperatives and third-sector customers. Speaking to the Customer Union, the bank told us:
Our SME banking business is a key priority for us as we build for the future and we believe there is significant potential for us to grow this part of our business. This external funding award recognises that potential and provides us with an opportunity to accelerate our plans. Our goal is to offer banking that makes a positive difference to small businesses, their customers, and the communities they serve.
Continuing to serve co-operative businesses, charities and non-profits is central to our plans for our SME banking business. Our award-winning Community Directplus account offers free banking to organisations of this nature, and we want to improve the service we provide, including improved digital services which we know is important to many of our customers.
The funding we have received will accelerate our ability to do this. In addition to the £15m funding we are making a £17m strategic investment of our own in order to modernise the way our SME customers are able to bank with us with an improved digital service and by developing products and personalised business support services to help small businesses thrive. Our multi-award winning SME banking proposition is a hidden gem and we want to play our part in driving competition and offering the UK’s SMEs a genuine alternative to the big 5 banks.
The grant comes about as a result of the government bail-out of RBS during the financial crash. The grants are intended to compensate for any distortion to the market resulting from the help given to RBS (state aid). The Co-op was not succesful in the first round of grants - most of which, possibly ironically, went to Metro Bank. This second round has been shared between the Co-op, Nationwide and Investec.