Bank of Scotland launches Total Business Account

Bank of Scotland Business Banking is the first British bank to bring consumer pricing to the business banking market by launching an account offering base rate (5.90% AER) on credit balances – almost double the interest paid out by the Big Four banks.

Aimed at businesses with an annual turnover of up to £1 million and with a minimum opening deposit of £10,000, the Total Business Account is the first business banking account to offer the full functionality of a current account with the benefit of a market leading deposit rate.

The account is aimed at helping Bank of Scotland take a bigger slice of the small business deposit market estimated to be worth more than £45 billion (BBA 2006). To launch an account offering the same rate of interest and charging structure as the Total Business Account would cost the Big Four more than £500 million per year.

The Total Business Account offers certainty of pricing for 5 years, by paying base rate on credit balances for 36 months for customers who switch their transactional current account, before reducing the rate by 75bps for a further two years. For customers who are unsure about whether to switch their main current account, the Total Business Account allows small businesses to test-drive the account for twelve months at base rate. If, after twelve months, the customer decides not to switch, the account will move to a variable rate (currently 4.75%).

The account also boasts a completely transparent fee structure of 30p per transaction which includes, for example, standing orders and direct debits. On an average basket of transactions, this equates to only 70% of the annual tariff currently paid by customers of the Big Four.

Shaking up business banking on the High Street

Bank of Scotland has launched the Total Business Account in the wake of the Competition Commission's provisional decision to scrap price controls, which required the UK's biggest four clearing banks to pay credit interest of 2% below Base Rate on balances.

The Total Business Account is the latest weapon in Bank of Scotland's arsenal to disrupt the current status quo of business banking in England and Wales by offering customers a much better deal than they receive with their current provider. New research carried out by Bank of Scotland Business Banking shows that only a quarter (24%) of small business owners think that that they receive better value for money from their bank compared to five years ago. In addition, only half (54%) claim to receive any interest on their main business current account.

Mark Curran, Head of Bank of Scotland Business Banking said: "Small businesses have, for too long, received a poor deal from their High Street banking providers. We know that businesses want higher rates of interest and lower charges, but both of these have been conspicuously absent from the small business banking market up until now. As the first British bank to bring consumer pricing to the business banking market, combined with a transparent fee structure, Bank of Scotland is finally offering small businesses the deal that they deserve with the launch of the Total Business Account. We believe that this account will revolutionise business banking and lay down a challenge to other banks to follow suit."