TSB boss Paul Pester hits back at MPs as bank grows customer base

Bank captured nearly 10% of all customers in the UK who opened new or switched their current accounts

The new look TSB (PA)

TSB chief executive Paul Pester has rejected accusations by MPs that the newly liberated bank was not big enough to challenge the big five high street banks after it took the lion’s share of new accounts.

He pointed out that over the past three months TSB, which came back to the high street a year ago and was floated off from Lloyds in June, had captured nearly 10 per cent of all customers in the UK who opened new or switched their current accounts.

“We have continued to deliver,” he said. “As we establish our credentials as Britain’s challenger bank there is recognition of how TSB is differentiated from other banks.”

The Treasury Select Committee, in its report on Lloyds’ aborted sale of branches in Project Verde to Co-op, said a standalone TSB “might struggle to grow significantly and to act as a true challenger in the market” with a 4.2 per cent share of the current account market as opposed to 7 per cent if it had become part of Co-op.

Pester admitted: “Scale is incredibly important in retail banking and if we’d started three or four times bigger than we are now then life would be easier. But TSB is fully formed and has everything we need to grow in this market.”

Third-quarter profits fell 14 per cent on a year ago but were up 32 per cent on the second quarter at £33.1 million.

In part this is due to the bank having to relaunch its sale of mortgages through brokers following its spin-off, which will happen in January.

This meant its loan book fell from £20.5 billion to £19.1 billion in 12 months, with Pester admitting it is likely to continue to shrink through 2015 but start growing again in 2016.

TSB shares rose 2.8p to 261.8p, just above their float price of 260p. Lloyds must sell its remaining 50 per cent stake by the end of 2015 on the European Commission’s orders following its £20 billion taxpayer bailout. Any further sale is unlikely until after both banks’ full-year results in February.

Following on from Virgin Money and Aldermore’s decision to pull their £2 billion and £900 million floats, Pester said the authorities could do more for new banks.

He said: “There is more that could be done to make it easier for challenger banks, particularly in giving them access to banking infrastructure, which remains an enormous barrier to entry in the UK. The US has 13,000 banks and the UK has very few.”