TSB promises to stay out of glamorous banking

Tim Wallace
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NEW HIGH street lender TSB will not lend to “large corporations, foreign speculators, or get involved in complicated derivatives,” its new chief said yesterday as part of its plan to promote local banking.

At a branch opening on Baker Street, Paul Pester said the bank’s key selling point will be transparency.

That means it will publish its local lending data to prove it is sending savers’ money back into the regional economy.

But the boss’s plan will also disappoint hard-pressed savers, refusing to increase the interest rate on the bank’s current accounts. Instead the same planned transparency will apply.

“We have to explain to customers how we cover the costs of issuing debit cards and cheques, of paying the charge when they use another bank’s ATM. It comes from the interest,” he said. “The interest foregone is what pays for branches.”

That transparency agenda will include novel features like an animation on the bank’s website explaining the costs involved in banking.

And Pester admitted the lender will be unable to compete hard until it is fully separate from Lloyds. Until then TSB will have to operate within Lloyds’ risk parameters, meaning it cannot stand out by, for example, offering loans on easier terms. But from that point the two vowed to compete hard.

“We will be fighting them in any way we can, from the moment they turn over,” said Lloyds’ group retail director Alison Brittain.

TSB will issue its initial public offering prospectus in April and begin the process of floating the bank in the summer of 2014. Depending on market conditions that could see the TSB fully off Lloyds’ hands by the end of the year.

However, the plan could still be changed if the bank finds a trade buyer willing to pay a higher amount for the 631 branches. Lloyds had previously tried to sell the unit to the Co-op Bank, but the deal fell through.