Lloyds TSB unveiled detailed plans yesterday to set up a new standalone e-bank called evolvebank.com as part of a strategy to have 5.5 million banking customers online by 2003.
The e-bank, headed by Jayne Almond, will begin operations in Spain before launching in the UK later this year, followed by Germany, France and Italy in 2001
Evolvebank.com aims for 575,000 UK customers by 2003 and 850,000 in Europe, or 26 per cent and 10 per cent of the predicted e-banking customer base for the UK and Europe respectively in three years' time. This is on top of the four million existing customers Lloyds hopes to be transacting online via the LloydsTSB.com portal by then.
Lloyds has set aside £300m for this and other e-banking initiatives in the next two years, on top of £500m already spent on information technology infrastructure. Lloyds TSB shares rose 11p to 609p yesterday.
Ms Almond said the new business would be the lowest-cost operation in the market, with no more than 100 staff, serving the entire continent of Europe from an office in Glasgow. That compares with 1,400 at Egg, Prudential's online bank, and 1,200 at IF, the new Halifax standalone bank, but it is comparable to Unofirst, the pan-European internet bank.
Evolvebank.com would give Lloyds TSB the option of developing a business organically in mainland Europe alongside its current efforts to find acquisition opportunities in the key European markets, said Ms Almond.
It would also meet demand in the UK from a younger breed of customer happy with internet-only banking, who would otherwise be tempted elsewhere.
Lloyds TSB unveiled plans for a new internet service provider with Lycos, the Web portal, upgrading its existing retail portal and setting up a business portal, Success4Business.
Mark Thomas, analyst at Fox Pitt Kelton, said : "As a strategy it makes sense, but we remain very sceptical about standalone internet banks. At the worst it will cost £100m; less than 3 per cent of a year's profits.
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