TSB unveiled a robust first-quarter trading performance today as the Spanish‑owned challenger bank urged regulators to use a “once in a generation” chance to break the “stranglehold” of the Big Five banks.
Group chief executive Paul Pester made his call to the Competition and Markets Authority (CMA) as TSB reported a 75 per cent jump in underlying pre-tax profits to £59.9 million in the first three months of 2016.
This compared with £34.2m in the same quarter of 2015. The group said 7 per cent of all customers opening a new bank account or switching banks in the quarter chose TSB, while its deposits lifted £900 million to £26.8 billion.
Pester said the bank’s total customer lending rose £1bn to £27.4bn, while its mortgages were at record levels, indicating that people continued to “vote with their feet”.
He said the bank’s takeover by Banco Sabadell last summer had given it “extra firepower” to take on the Big Five, but added that “we can’t do this alone”.
Pester said: “We need the CMA to use the once in a generation opportunity they have to help us bring the full force of competition to bear on the UK banking market.
“We want all bank customers to know what they’re paying for their banking. All customers – including overdraft users – to be able to switch easily. And all customers to be aware of their right to switch banks.”
The CMA’s provisional report into the banking industry last autumn identified some competition problems in the personal current account and small and medium-sized enterprise (SME) markets.
The regulator is due to publish its final report next month. It has so far stopped short of breaking up the big banks, instead recommending a raft of proposals to help promote switching after it revealed last October that bank customers could save £70 on average a year by changing current account providers.
But Pester said TSB believed the regulator had not gone far enough in suggesting remedies. The lack of transparency on current account charges came amid the banking industry making between £7bn and £8bn a year on those accounts, he added.
The chief executive suggested that TSB’s focus in the foreseeable future would be on internally-generated growth rather than acquisitions, and specifically ruled out any interest in Williams & Glyn, the branch-based subsidiary currently being demerged by Royal Bank of Scotland.
“We are too busy working on the integration (with Sabadell),” Pester added. “We have no interest in Williams & Glyn and at the moment we are not working on anything (regarding acquisitions).”
TSB is one of a number of smaller players that have entered the market in recent years, alongside other challengers such as Metro Bank, which reported its first quarter figures on Wednesday, and Virgin Money.