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TSB returns to the high street with renewed focus on local communities



TSB, which merged with Lloyds in 1995, has returned to the British high street after a hiatus of nearly two decades.

The bank has said it will support local communities and businesses by going back to its local banking roots. Its re-emergence could improve competition within the banking sector and as a result benefit businesses and consumers.

TSB became the eighth largest high street bank overnight when it was formed from the separation of a 631-branch unit from Lloyds Banking Group. The Co-operative Bank had initially planned to take over the branches, but its attempts failed in April.

As part of the pledge to be a localised bank, TSB has promised to have named branch managers and open up unused space in branches for the benefit of local businesses.

Speaking to the Telegraph, Lloyds chief executive António Horta-Osório said, “TSB is going to go back to what it used to do, which is local banking and great relationships at local level.”

He added, “The TSB is going to be another choice on the high street. A bank which has loans and deposits absolutely matched. Has no toxic assets, all the toxic assets stayed with Lloyds. Has no legacy issues. And it has very high capital ratios. So, it has all the conditions to be a very strong challenger on the high street.”

The addition of TSB on the high street could give consumers a boost when it comes to banking options – particularly given the new seven-day switching service is set to be launched on September 16.

Whilst some have said TSB will boost competition, other experts disagree. Gary Greenwood, banking analyst at Shore Capital, said, “TSB will be painted as a new challenger bank on the high street but I doubt that its pricing is going to be differentiated to competitors.”

Whether or not TSB will have a large impact on the competition within the retail banking sector remains to be seen, but if it keeps it promise to focus on local banking it should lead to some improvements.

Further reading:

Co-op Bank faces uncertain future as deal to buy Lloyds branches collapses

Lloyds faces criticism over bonuses and PPI mis-selling after revealing a £570m annual loss

Big five’s banking monopoly at risk, with 2.4m closing accounts in 2012

Co-op to take on 4.8m Lloyds customers in banking overhaul

The Guide to Sustainable Banking 2012