A BANK needs more than a resonant, historic name to be a success these days. The financial crash and its aftermath have been littered with banks boasting such a pedigree.
It is therefore not a given that the reborn TSB Bank will thrive. But the business, due to be spun off by parent Lloyds on the stock market next summer, has the advantage of being a traditional, community bank unencumbered by toxic assets.
Its chief executive Paul Pester, who has overseen the split from Lloyds, promises a focus on mortgages, household lending and small business loans rather than racier investment banking or derivatives.
Equally, he makes clear TSB will be a specifically UK bank with no far-flung overseas operations to divert management focus. The new TSB comprises more than 630 branches, spun off by Lloyds to meet the European Commission’s conditions of a state bail-out. This gives TSB 6 per cent of the UK branch network and, with 4.5 million customers, it will have real on-the–street clout and credibility as a challenger bank.
From this week it will be visible from John O’Groats to Lands End, with a particularly notable presence in Scotland where the Lloyds retail brand is disappearing.
Despite some electronic teething problems at yesterday’s launch, Pester hopes TSB’s internet banking arm, mobile banking apps and four call centres will also persuade customers that they are not just buying into history but into a live, flexible 21st century bank.
There is also little reason to doubt Lloyds’ contention that it and its subsidiary on the spin-off slipway will compete hard on price and service from the get-go.
Lloyds has been doing this with its challenger Halifax brand for the past four years. It is also in the parent’s interest for its offspring to give it a run for its money so that the assets attract valuations towards the top of the range when it comes to the stock market. Putting things in perspective, TSB’s relaunch falls well short of any watershed in British banking. There will still be five major UK banking players on the high street in Barclays, HSBC, Lloyds, RBS/NatWest and Santander.
But the Co-op Bank looks likely to be hors de combat for some time following its abortive attempt to take over the Lloyds branches, and the future of the RBS branches put up for sale remains shrouded in some uncertainty.
Even Pester is saying the TSB could be picked off before it gets to market. For now, though, a phoenix-like independent TSB with a clear, less-is-more community banking strategy is the best we have as a way of shaking up a complacent UK banking sector.
We should not be sniffy about it, and give it some time to show its paces.
• Lucozade deal likely to add fizz to Barr’s plans
The sale of Ribena and Lucozade soft drinks by drugs giant GlaxoSmith-Kline to Suntory of Japan makes sense for both companies.
It allows GSK to focus ever more on its core prescription drugs and healthcare market, while a thoroughgoing consumer goods operator like Suntory has the expertise and scale to make the most of two household brands.
Following the failure of its tie-up with Britvic, Scottish soft drinks group AG Barr is said to be focused on organic growth. But it surely won’t be long before consolidation prospects draws its attention.