Where Is The Missing £18 Million?

Before we deal with the missing £18 million, members would have read in the news that Sabadell’s Chairman, Josep Oliu, speculated that TSB could be sold once it’s returned to profit and the IT issues had been put right. He was reported to have said that TSB was to enter a “process of consolidation in the future in Britain”. The Sabadell spinmeisters have said that Mr. Oliu was simply saying that when consolidation happens amongst the challenger banks, which it will because many of them are too small to survive, TSB wants to be the biggest. Whether the regulators would allow TSB to buy other lenders given its ongoing IT problems is another issue. Equally, the new TSB platform is not state-of-the-art and in many areas is worse than the old system, even when it’s working properly according members. Members interested in looking at the next generation of core banking platforms should look at Lloyds Banking Groups recent £11 million investment in a fintech called ‘Thought Machine’. Proteo is 10 years out of date in comparison.

One can see a scenario whereby Sabadell decides that the TSB brand is too toxic and buy another challenger bank with a stronger brand, like the Co-operative bank for example. But that’s all speculation, which we will cover in another Newsletter.

Where’s The Money?

£18 million is how much staff have lost collectively as a result of the agreement between Accord and TSB. Front-line members of staff were expecting to receive 12.5% in March next year, whereas the Recognition Award is worth on average 7%. That means the average member of staff is 5.5% worse off because of the IT problems they didn’t cause and had no control over. Part time members have suffered even more as a result of the Accord agreement.

We suspect that TSB will use some of that £18 million from the staff kitty to pay off Paul Pester. So that leaves £16.3 million. Richard Meddings, the acting Managing Director in all but name, would expect to see his salary increased to reflect his increased responsibilities. The TSB Board will have had more meetings this year than all the previous years put together and that will be reflected in their individual payments for 2018.

And in act of supreme irony, TSB will use most of the missing £18 million to fund next years pay award. Last year most staff got 1% to 2.5%, depending position in the pay range, which was one of the worst pay deals in the finance sector. And once again, Accord’s inaction meant that the Bank was allowed to impose such a deal without any challenge whatsoever. Members can expect the same again next year. We estimated at the time that the vast majority of TSB staff would see their pay reduce in real terms by on average 2.1%. And’s that what’s happened.

The Next Steps

TBU will be asking members to write to MPs to let them know how staff have been treated following the IT meltdown and how that compares with the treatment of Mr. Paul Pester, the architect of the biggest IT meltdown in UK corporate history. The BEC honoured his salary and bonus payments but staff have been fobbed off with a measly payment of £1,500. TSB is hoping that the anger of staff will dissipate once they get the award. That will not happen.

Members can let us know how they feel by contacting us at 24hours@tbuonline.co.uk.