View from City Road: Back to basics at TSB

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The Independent Online
The TSB's continued retreat from its Eighties extravagances makes a lot of sense. It has already cast off Swan National cars, Target fund managers and the stockbroker Bell Lawrie Wight.

Now it is the turn of the TSB's 133 estate agencies, a ragbag collection run under their original names and not even integrated under the TSB flag.

TSB built up the chain when it had lots of cash burning a hole in its pocket, and every financial services company believed that getting a foothold in the housebuying chain was a passport to the rich crumbs dropped by homebuyers when they took out a mortgage and bought life, buildings and contents insurance.

But the property market has been so dismal that the high prices paid for these nebulous businesses now look ridiculous, and the stampede out of estate agencies is well under way. TSB merely follows both Prudential and Abbey National, both of which took bloody noses for their misplaced ambition.

TSB has at least done well to get a deal that does not fix the price now - possibly at the bottom of the housing market cycle - but will allow it to share in any gains over the next few years.

The remaining question is whether its investment banking arm, Hill Samuel, now goes too. If it does TSB will poorer and wiser - and back to its pre-privatisation shape as a solid little retail bank.

The buyer, N&P, says it has found a deal that fits its philosophy. It has plans to expand from core 'mother' branches via smaller 'daughter' agencies. As part of this plan it has been picking up Abbey National's agencies in far-flung places.

This is all very homely, but it is hard to see why it should be able to extract synergies from the acquisition when TSB, the Pru and Abbey National all failed. Cobblers should stick to their lasts.

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