TSB opens doors as bank prepares Lloyds spin off

Tim Wallace
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THE NEW TSB Bank will open its doors to customers this morning, as the spin-off from Lloyds Banking Group unveils its rebranded high-street sites.

When it is fully sold off from Lloyds, the 632 branches will represent a new competitor on the high street and has pledged to focus on local, traditional retail banking.

Its website saw 100,000 of its 4.6m customers log on yesterday, though it suffered some teething problems.

Initially savers had trouble when their Lloyds accounts redirected to TSB, which only went live at 10am, leaving a delay in accessing accounts.

And others had trouble with the Chrome and Firefox browsers which treated the new site as a potential phishing hazard, fearing it could be a fraudulent site looking to harvest users’ account details.

By the end of the day the problems appeared to have been resolved.

Lloyds is being forced to sell the 632 branches by the European Commission, as part of the group’s 2008 bailout deal.

They are largely made up of the former Cheltenham and Gloucester branches in England, plus a handful in other areas like Scotland, to give the new challenger bank a broad UK-wide reach with which to take on the larger lenders.

Customers got no say in the change, being moved with the branches they are registered at.

The unit is still a part of the banking group currently, but will be floated on the stock market in a process beginning next year. It will fully compete as a rival lender then, but before the floatation will offer alternative products to the group, in the same way as the Halifax and Lloyds brands operate separately. Those new products from TSB are expected to come around Christmas of this year.

The Co-op Bank had planned to buy the branches, but the bid failed because the mutual group was struggling with a £1.5bn capital hole.

■ Trustee Savings Bank, TSB, was an independent bank from 1810 until it merged with Lloyds in 1995.

■ Its 632 branches, with 4.6m customers, are being sold by Lloyds to boost competition. It is being forced to divest the branches by the European Commission as part of its 2008 bailout deal.

■ The ruling came because competition rules were suspended in the financial crisis to let Lloyds take over major rival HBOS, making the market even more concentrated.

■ TSB’s chief is ex-Virgin Money and Moneyfacts boss Paul Pester. He has also held roles at Santander as well as non-executive positions at Visa and the British Bankers’ Association.

■ The new lender is taking on other top staff from Lloyds including TSB’s chief operating officer Helen Rose who integrated HBOS’ and Lloyds’ retail businesses.

■ Chief finance officer Darren Pope also held that role at Lloyds’ mortgage arm.

■ TSB will inherit no PPI costs from Lloyds, freeing it from the huge compensation costs affecting much of the rest of the industry.

■ It will also have new, independent IT systems, again meaning it is not struggling with those legacy problems.

■ TSB has roughly six per cent of all bank branches in the UK.

■ Five million Lloyds customers – any who hold accounts with one of the 631 branches that are being rebranded as the TSB bank – will have their accounts automatically switched to TSB.