TSB fights claims it’s too small to challenge

TSB’s chief executive, Paul Pester has rejected suggestions by MPs that the newly liberated bank may not be large enough to challenge the “big five”. who are seen to have too much of a stranglehold over competition.

He pointed out that over the past three months TSB, which was floated off from Lloyds in June, had captured nearly 10 per cent of all customers in the UK who either opened new current accounts or switched them.

“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-operative Bank, 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.

Mr 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 at TSB fell 14 per cent on a year ago but were up 29 per cent on the second quarter at £33.1m. In part this is because the bank is having to relaunch its sale of mortgages through brokers. TSB shares rose 4.3p to 263.3p, just above their 260p float price.