At its Investor Day meeting at the end of May, Sabadell confirmed that TSB will focus on mortgages. There will be “less appetite for consumer loans” and any new lending “will focus on lower risk and lower capital consumption products”. It seems that TSB is retreating into its core mortgage product at the expense of almost everything else. Whilst we have seen a boom in the housing market driven by home-movers looking for more space, that will not be sustainable in the medium term, especially when we get back to normality. The question left hanging by Sabadell’s Chief Executive, Cesar Gonzalez-Bueno, is what will TSB do then?
In TSB there will be a renewed emphasis on cutting more costs out of the business and that will inevitably mean more job cuts and branch closures. Interestingly, Nationwide recently announced that it was cutting 150 mortgage adviser jobs with more mortgages being done by video conferencing. In fact, things are so bad that TSB is closing the Savings Bank Museum in Rothwell. That was the site of the “penny bank” set up by Rev Henry Duncan in 1810. That’s a name TSB never mentions anymore.
Sabadell is by far the least efficient of Spain’s five largest banks, with a cost-to-income ratio for the fourth quarter of 2020 of 80.8% and because of that its future as a stand-alone bank remains in doubt, even after the announcement of its new strategy. The main function of the new strategy is to buy Sabadell a little bit more time to turn things around. This is highly relevant to TSB staff.
Whilst it wasn’t mentioned explicitly at the investor meeting, what’s clear is that Sabadell intends to sell TSB but only when the price is right. At the moment the price is not right and, to be honest, there aren’t many players interested in buying TSB. Sabadell has abandoned any ideas of becoming a main player in the UK banking industry and currently is happy to just survive as a bit player. This is the harsh truth; unpalatable though it will be to many staff.
TSB needs to get back to being a ‘challenger’ bank willing to take on the big five banks rather than simply cowering in the corner. We’ve said before that TSB staff want to be inspired but that’s something the current senior management team is failing to do, possibly because the real decisions are made in Spain. The Chief Executive inherited a ship that was already taking on water and isn’t to blame for the past, but she is going to need to find and be allowed to implement a new formula pretty quickly.
As things stand, Sabadell’s new strategy failed miserably to set out a convincing future for TSB. If anything, it’s made things worse, if that was possible. It’s not ‘Money Confidence’ TSB staff need, it’s confidence in the future. That is sadly lacking at the moment.
Members with any questions or comments should contact the Union’s Advice Team on 01234 716029 (choose Option 1).