TSB's lending decisions aren't that local after all

The boss of Lloyds spin-off TSB says that the new project will "bring local banking back to Britain". All money put with a local branch is intended only to support a local loan or mortgage.

Decisions over how that borrowing is issued isn't as decentralised as that may imply.

Paul Pester, chief executive office, TSB:

The branch manager cannot overrule central credit decisions. We have consciously taken that decision because we absolutely believe centralised decision making based on the amount of data we have across 4.6m customers means we can extend more credit to more customers than we could if we relied purely on branch managers.

So all that lending is still determined by a computer system that doesn't reside at your local branch.

And Neeta Atkar, chief risk officer, TSB:

Like any other bank we have to be responsible in our lending – it is not in the interests of customers to borrow more than they can afford. But the difference we will make is that we are committed to explaining to customers on the occasions we do say no.

We will be explaining what they can do to maybe get a yes answer on, for example, their mortgage. It might be about affordability, or about unused credit cards with high limits. If they are not using those limits, get rid of the credit cards and come back to us.

We do want to be much more transparent, which is a key value for us, so that we can offer customers the opportunity to have a much more constructive conversation with us.

The mystery here is why anyone would think that TSB would allow individual bank managers authority when granting loans. Huge amounts have been invested in systems that are meant to make lending safer than ad hoc decisions.