It’s not just TSB customers who are disgruntled with the split. Around 1,000 customers, who have been told to stay with Lloyds, have expressed a desire to move to TSB. Omnishambles much?
In total, 4.6 million customers will be moved from Lloyds to the newly carved out TSB bank and despite Lloyds’ chief Antonio Horta-Osorio’s assurance the split will be seamless, the cracks are already starting to show.
It’s pretty understandable. Lloyds customers have had no choice in the matter and for many, it is an inconvenient switch. The new TSB customers will see their brand branches cut by two-thirds – with many now significantly further away from their local bank branch. Exactly how Lloyds has decided to split its customers up has yet to be revealed.
The move is seen as a branding exercise, Lloyds is reviving an old brand, which remained untarnished by the financial crisis. But with so much consternation, the split might have a negative effect on the Lloyds brand. And at an estimated cost of £1.3bn for Lloyds Banking Group, that’s not an outcome it will enjoy.
TSB, when it opens its doors on Monday, will become Britain’s eighth-biggest high street bank. Lloyds bought it out 18 years ago, having caused itself considerable damage by paying £777m for investment bank Hill Samuel right before the 1987 stock market crash.
Lloyds was originally ordered to sell the branches by the European Commission, to create more choice, and the sale was stipulated in the government’s bailout of the bank. The plan had been to sell them to Co-op Bank but the deal fell through back in April. Fresh out of ideas, Lloyds decided to re-launch TSB and float it on the stock market. The floatation is expected next year.
The new TSB customers will be issued with new cards but their account numbers and sort codes will remain the same. Initially, they will be offered the same range of financial services as at Lloyds but TSB start rolling out its own services from early next year.
TSB, once known as Trustee Saving Bank, has said it will have a focus on UK individuals and small firms, turning away from overseas customers and investment banking. New chief executive Paul Pester proudly proclaimed to his new flock: ‘Welcome back to local banking.’
Well Paul, tell that to the new TSB customers who will have to travel for miles to find their nearest branch.