Sabadell has confirmed that in respect of its international businesses, TSB and Mexico, “No sale process will be initiated in the near future”. However, it’s clear from recent organisational changes initiated by the new Chief Executive Officer, that Sabadell intends to sell TSB, but only when the price is right. At its General Meeting held on 26th March, Josep Oliu, Chairman of the Board, said: “We have decided to focus on domestic activity in the coming years…..”.
Sabadell is set to unveil its new strategy in May. TBU will be at that unveiling.
The latest announcement of 130 job losses in Mortgage Services and the Account Maintenance TFO Teams is just the first of many announcements we expect from TSB over the next few months. TSB is in a race to cut costs and increase income to show that it’s a sustainable business that is worthy of future investment. With low interest rates and overdraft charges, TSB is now up to a third less profitable than it was when it was created by Lloyds. With its core business in the doldrums, like all the main banks, TSB will no doubt be looking to generate new sources of income. We reported a few weeks ago that Lloyds was planning to enter the property business by leasing homes directly to tenants. TSB is not in a position to do anything like that and its ability to generate alternative income streams is also limited. The plan to charge customers for upgraded accounts will produce some income but nothing like what it needs. TSB is also losing customers faster than most of the other banks. In the latest quarterly data from CASS, the switching service, TSB lost 3,046 customers compared to Nationwide which gained 10,083 customers. HSBC lost fewer customers than TSB. For a bank the size of TSB, that’s not sustainable.
We think TSB is going to concentrate on the costs side of the equation and that will inevitably mean more branch closures and redundancies. But that’s only going to make things worse for the TSB. It needs to get back to being a ‘challenger’ bank willing to take on the big five banks rather than simply cowering in the corner. TSB staff want to be inspired and that’s something the senior management team badly need to do. We hope that once Sabadell’s new strategy is unveiled it will set out a convincing future for TSB. We won’t be holding our breath.
Members with questions or comments on this newsletter can contact the Union’s Advice Team on 01234 716029 (choose Option 1).