Scottish Daily Mail

TSB’s fu­ture hang­ing in the bal­ance

Col­lapse of talks be­tween Span­ish gi­ants leaves ...

- By Lucy White Business · Finance · Investing · TSB Bank · Spain · Goldman Sachs Group · United Kingdom · Margaret Thatcher · RBS Securities · Madrid · Sabadell · Bilbao Vizcaya Argentaria Bank · Lloyds Bank · Virgin Money · Metro Bank · Debbie Crosbie

TSB’S fu­ture is up in the air af­ter takeover talks be­tween its Span­ish owner Sabadell and ri­val BBVA col­lapsed.

The Bri­tish bank, which has been passed from one owner to the next since it split from Lloyds Bank in 2014, finds it­self on the block again as Sabadell said it wanted to fo­cus on its home busi­ness in Spain.

But as Sabadell ap­pointed Gold­man Sachs to find a buyer for TSB, the next phase for the bank and its 5m cus­tomers was un­clear as an­a­lysts said it was hard to imag­ine an ob­vi­ous bid­der.

James Da­ley, man­ag­ing di­rec­tor of con­sumer rights site Fairer Fi­nance, said: ‘I don’t think Sabadell was par­tic­u­larly good news for TSB.

‘The re­port into the IT melt­down at TSB in 2018 pointed the blame pretty squarely at Sabadell.

‘Former boss Paul Pester did a good job es­tab­lish­ing TSB as a chal­lenger bank and the IT dis­as­ter un­der­mined all of that.

‘When a bank is up for sale there’s a risk and an op­por­tu­nity – there’s a chance for the new owner to re­ally build on its core con­sumer val­ues.

‘But it would be a shame if TSB was swal­lowed up by a big bank and dis­ap­peared, or was bought by pri­vate eq­uity be­cause his­tory tells us that im­pa­tient own­ers don’t work out well. An­other chal­lenger like Vir­gin Money or Metro Bank could be a good buyer.’

But Ben­jie Cree­lan-Sand­ford, an an­a­lyst at Jef­feries, said it was hard to see any ma­jor UK banks hav­ing ei­ther the in­cli­na­tion or the fi­nan­cial fire­power to buy TSB.

Dis­cus­sions be­tween Sabadell and BBVA were an­nounced ear­lier this month, when the lat­ter con­firmed it was look­ing to make a bid for Sabadell.

But in an an­nounce­ment to the stock mar­ket yes­ter­day, Sabadell said the courtship was over as the two sides had failed to reach an agreement on price.

The Span­ish lender added that it would now ‘an­a­lyse strate­gic al­ter­na­tives for cre­at­ing share­holder value with re­gard to the group’s i nter­na­tional as­sets, in­clud­ing TSB’. This would most likely mean sell­ing TSB, as ap­petite among in­vestors for banks is weak and it would be tricky to float it on the stock mar­ket.

Since TSB, which started out as a col­lec­tive of sav­ings banks more than 200 years ago, listed on the stock mar­ket dur­ing Mar­garet Thatcher’s pri­vati­sa­tion era in the 1980s, it has been passed from pil­lar to post.

For al­most two decades it was part of Lloyds, be­fore be­ing relisted on the stock mar­ket when reg­u­la­tors forced a break-up of the bank fol­low­ing the fi­nan­cial cri­sis. Less than a year later it was bought by Sabadell, which wanted to help TSB shake up the bank­ing sec­tor and end the dom­i­nance of high street lenders such as Natwest and Lloyds Bank.

But those hopes were dashed when it suf­fered a ma­jor IT melt­down in 2018, leav­ing thou­sands of cus­tomers locked out of their online ac­counts for weeks and lead­ing it to be dubbed ‘To­tally Sham­bolic Bank’.

Though the Bri­tish bank has tried to re­cover un­der the lead­er­ship of chief ex­ec­u­tive Deb­bie Cros­bie, it booked a £65.5m loss in the first half of this year af­ter set­ting aside £87.5m to cover loans ex­pected to turn sour.

It is now plan­ning to axe al­most half its branches – 246 sites – over the next two years.

This will leave it with just 290 lo­ca­tions by the end of 2021.

Since its IT is­sue, TSB has in­vested heav­ily in online op­er­a­tions and en­cour­ages its 5m cus­tomers to use dig­i­tal bank­ing.

Sabadell said it plans to fo­cus on its do­mes­tic mar­ket of Spain. Its shares plunged by 13.6pc in Madrid yes­ter­day as in­vestors reg­is­tered their dis­ap­point­ment at the fail­ure of a deal.

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