Nationwide Building Society (Nationwide) has announced that it is stopping plans to enter the UK business banking market as it prioritises supporting its members through the immediate and longer-term financial implications of COVID-19.

The impact of COVID-19, including assumption changes to short and long-term interest rates, has meant that the option of entering the business banking market is no longer commercially viable. As a consequence of its decision, Nationwide will cease activity directly related to its proposed market entry.

The building society had already taken several steps towards opening business banking capabilities. In May 2019, Nationwide was awarded a £50m grant from Banking Competition Remedies’ Capability and Innovation Fund in order to ‘develop a new business current account or ancillary product propositions for SMEs in the UK’. This was the top grant in the Fund’s Pool B funding. Nationwide says it will return this grant award and any other sums that may be due to BCR.

In March 2019, Nationwide took a £15m investment in 10x Future Technologies as part of its plans to build to a new cloud-native platform for its business current account and related products. Nationwide says it plans to continue to work with 10x Future Technologies in the application of the platform for the Society’s existing and future product ranges.

The financial implications of the cancellation will be disclosed within Nationwide’s preliminary full year results for 2019/2020. At this stage, the building society estimates the costs of cancellation will be in the region of £70m in 2020, but expects running cost and investment savings will make this a net neutral cost over the next 24 months. All employees will be redeployed to other roles within Nationwide.

The building society says the announcement does not impact its business savings accounts, which will continue to operate as normal.

“Our priority as a building society must always be our existing members and employees,” said Nationwide Building Society CEO, Joe Garner. “COVID-19 has changed the medium-term interest rate landscape, meaning the business case for entering the market is no longer viable. Therefore, our absolute focus will be on supporting our members and our employees through the immediate difficult time and future financial implications of the virus.”