COMPETITION to Britain’s big five high street banks from the new so-called “challenger” sector gained some momentum yesterday, even if the effect is more symbolic than practical at this stage.
Lloyds Banking Group priced the first 25 per cent tranche of the sale of its TSB subsidiary, whose divestment had been ordered by the European Commission in return for the parent’s taxpayer bailout in the financial crash.
And Tesco Bank launched its current account five and a half years after the food retailer took full control of what was formerly a joint venture with Royal Bank of Scotland.
As the operation’s chief executive Benny Higgins says, unless a bank has a current account at the heart of its offer it is difficult to see how it can be a bona fide challenger to the cosy status quo typified by Barclays, HSBC, Lloyds, Royal Bank of Scotland and Santander.
A partial float and new current account on the block clearly are not game-changing events. But they do show the gradual, incremental progress towards smaller – but growing – operators challenging the big incumbents.
This is particularly necessary given the technicolour fallout at Co-op Bank that dashed the government’s hopes that the “ethical” bank would become a new major rival to the established players.
TSB has 4.5 million customers and 6 per cent of UK bank branches. Tesco Bank, while overwhelmingly an online operation, has some six million customers and has been making strong progress on savings, loans and credit balances.
Unsurprisingly, both brands are making big play of being untainted by the mis-selling controversies that have tarnished large swathes of the incumbents.
TSB has struck an indemnity deal with Lloyds against historical conduct-related losses, which makes the pricing of its stock market offer below book value more attractive.
Higgins says Tesco Bank was first out of the blocks in scrapping incentives for hitting sales targets, and is now being followed by others, which include partly taxpayer-controlled RBS and Lloyds.
Challenger banks could come in all shapes and sizes.
TSB has 631 branches, so the high street visibility will be strong whereas Tesco Bank, which has big centres in Edinburgh, Glasgow and Newcastle, is primarily an online offering, but stresses that is increasingly the way the consumer is going to do their banking.
We wish both operators well if they succeed in driving a better bargain for Britain’s households and businesses. Ethical behaviour on top would be a bonus, and not in the traditional sense in the sector.
Corporates fear seedy football associations
BUDWEISER and BP are the latest football World Cup sponsors to insist Fifa investigate mushrooming allegations of corruption surrounding the award of the 2022 finals to Qatar.
It adds to similar moves from the likes of Adidas, Coca-Cola, Sony and Visa who all fear corporate brand collateral damage.
For way too long, Fifa – under the leadership of the egregious, rhino-skinned Sepp Blatter – have swept allegations of misconduct under the capacious table of the ludicrous concept of the Football Family.
But Fifa knows about money. When big business makes demands for investigation the ante is upped to a level that cannot be bluffed out.