Lloyds battles to keep Scottish TSB brand in sale of branches to Co-op
The future of the brand, whose roots can be traced to Dumfriesshire in 1810, remains uncertain amid speculation that Lloyds may prefer to keep it.
The Co-op was last week named the preferred bidder over NBNK Investments for a package of branches, including the 185 Lloyds TSB Scotland outlets north of the Border.
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Hide AdLloyds TSB Scotland has its own separate banking licence and was included in the deal so that a potential newcomer such as NBNK, which is an acquisitions vehicle, would be able to start trading immediately. However, given that the Co-operative Group already has a well-established financial services operation with its own brand and licence, banking sources argue that Lloyds would probably fight to keep hold of the TSB name, which has special significance in Scotland.
The brand emerged in the early 19th century when Reverend Henry Duncan, later dubbed the “father of the savings banks”, founded an organisation that would allow his poor parishioners to save for hard times.
The Co-op has stated that it is too early to determine what it would do with the TSB name, but sources say Lloyds would push to retain it if all of the TSB branches were to be re-cast as the Co-operative Bank.
“Because the Co-op is already a bank and may have no requirement for the TSB brand, that might be something we negotiate,” said one Lloyds insider.
Gavin Brown, finance spokesman for the Scottish Conservatives, urged both parties not to consign the name to the history books.
“Which bank takes it up is less important to me than the brand remaining alive and well. It would be missed and it would be a pity if it was lost,” he said.
Following its failed bid, NBNK is understood to be weighing up all options, including possibly renewing takeover overtures to Clydesdale Bank and Yorkshire Bank, or shutting down entirely early in the new year. Formed as a publicly-quoted acquisitions vehicle to trigger consolidation in the UK banking sector, it has also previously lost out on Northern Rock.
It is now understood that Lord Levene, chairman of NBNK, and chief executive Gary Hoffman, the former boss of Northern Rock, will make a decision shortly. One option will be to return the vehicle’s £50 million war chest raised at flotation to investors, and close the operation down.
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Hide AdAmong NBNK’s backers are Baillie Gifford, BlackRock Investment Management, F&C Asset Management, Invesco Asset Management, JP Morgan Asset Management and UBS.
However, it is believed Levene has not at this stage ruled out another tilt at NAB UK, which owns the Clydesdale and Yorkshire Banks.
Both were recently downgraded by two credit rating agencies, Fitch and Moody’s.
However, one banking source said: “NAB UK walked away from the sale of the Lloyds branches this year, the sale of RBS branches last year and Northern Rock because they were determined not to overpay. They are equally determined not to be bought on the cheap by an NBNK desperately seeking a raison d’être following its failure in the Lloyds auction.”
NBNK would not comment.