NEW HIGH street lender TSB was given another boost last night as the Office for Fair Trading (OFT) said its parent Lloyds should give it more financial help to establish a foothold in the market.
The decision is believed to remove the final hurdle before the government can go ahead with selling Lloyds Bank, as there is no longer uncertainty over the potential cost of setting up the TSB.
The TSB has 631 branches and 4.6m customers, giving it around 6.5 per cent of all branches and 4.5 per cent of the current account market.
But the OFT believes it needs at least five per cent to have a strong competitive impact on the market.
The TSB had planned to grow closer to 6.5 per cent of customers in the coming years, but the OFT recommended Lloyds give it a boost.
As a result it will hand over £40m up front to help with advertising and marketing expenses.
And over the next four years TSB will receive the income from a £4bn portfolio of Lloyds’ buy to let mortgages – giving an income stream of around £200m.
Now the final shape of TSB is in place, the UK can ask the European Commission for an extension on the divestment of the unit – it is likely to be floated in 2014, a year later than the EC had wanted.