TSB has announced plans to close 82 branches next year and slash up to 400 jobs as part of a strategy overhaul aimed at saving £100m by 2022.
Unveiling a new three-year strategic plan, chief executive Debbie Crosbie today said the savings would help deliver a 15 percentage point improvement to the bank’s cost to income ratio.
“Our new strategy positions TSB to succeed in a challenging external environment at a time when we know customers want something different and better from their bank,” Crosbie said.
It comes as the high street bank reels from the findings of an independent probe into a catastrophic IT meltdown that last year left 2m customers without access to online banking and cost the firm roughly £370m.
The inquiry, carried out by City law firm Slaughter and May, accused TSB’s board of “lacking common sense” in the run-up to the crisis. It also placed the blame with Sabis, the IT arm of TSB’s Spanish owner Sabadell.
Talking to reporters, Crosbie said that “no one is going to shy away from what happened”, but refused to be drawn on whether she thought the law firm’s report was fair.
TSB today said it will pump £120m into its digital channels over the next three years in a bid to make three-quarters of its customers digitally active.
The investment will be used to build on the bank’s existing mobile app capabilities, as well as the automation of some of its branches.
In addition, Crosbie outlined plans to achieve roughly five per cent net lending growth per year.
The bank said it will incur restructuring charges of around £180m over the course of the plan, while between 300 and 400 employees will be made redundant.
TSB, which posted a loss last year, said it aims to record pre-tax profit of between £120m and £140m in 2022.
However, the move sparked outrage at union Unite, which urged Crosbie to reverse the “appalling decision”.
“The decision by TSB to abandon 82 local community bank branches is absolutely deplorable and a tragedy for the banking sector,” said national officer Dominic Hook.
“This is a betrayal of the bank’s customers and staff who have remained loyal through recent tough times.”
The new strategy also marks a move away from TSB’s previous slogan of “Local banking for Britain”, with Crosbie instead making reference to its target market of the “Aspiring Middle”.
This segment is made up of “working families, money balancers and variable income customer group”, who the bank boss said have a “wealth of unmet needs”.
“The plan we’re sharing today involves some difficult decisions, but it sets TSB up to succeed in the future,” Crosbie said. “Taken together, these changes will help us to serve more customers, better, for the long-term.”
The bank said it will publish the locations of branch closures later in the week, after impacted employees have been informed.