The TSB bank today returned to the High Street, with its chief executive saying it would never take part in the kind of “socially useless” investment banking done by City rivals.
Speaking as the 631 branches — with 4.6 million customers and more than £20 billion in loans and deposits — that Lloyds was ordered to sell by Brussels began their new life as TSB, Paul Pester said: “I am firmly of the view that banks have to do socially useful work.
“So do not come to our bank if you want your investments to go into derivatives, investment banking, large corporates overseas. We will be all about using customers’ deposits to help create local economic growth. We are doing what is right for Britain and trying to right some of the wrongs of the banking industry.”
TSB itself is born of some of those wrongs — the disastrous high-risk commercial lending done by HBOS, which led to it being taken over by Lloyds during the financial crisis. That deal quickly soured, necessitating a bailout by taxpayers, who still own nearly 40 per cent of Lloyds. In return for that, the European Commission insisted Lloyds offload 600-plus branches — known as Project Verde — to a new player.
Chancellor George Osborne is gearing up to announce the first sell-off of part of the taxpayers’ stake in Lloyds later this week. It is expected that about 10 per cent, a quarter of the Treasury holding, will be offered to institutional investors ahead of next month’s Conservative Party conference.
“We are here with a really clear mandate to bring more competition to UK banking. How are we going to do that? By bringing a local banking model back to Britain,” Pester said. “Customers want to know their savings are going into the local community, not to fund big bankers’ bonuses.”
On his own pay, Pester said: “I will be proposing a different way of rewarding the senior team.” He declined to give details but it appears he and his board will be paid on a longer-term performance model than most other City banking executives.