The Nationwide Building Society 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 UK’s largest building society said that 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, it will return the £50 million grant funding it was awarded from the Banking Competition Remedies’ Capability and Innovation Fund, as announced in May 2019, and won’t participate in the Incentivised Switching Scheme.

At this stage, Nationwide estimates the costs of cancellation will be in the region of £70 million in 2020 but 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.

Today’s announcement does not impact Nationwide’s business savings accounts which will continue to operate as normal.

Joe Garner, the Nationwide Building Society’s CEO, said:  “Our priority as a building society must always be our existing members and employees. 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.”