“We’re a new bank … that’s been around for 200 years.”
Paul Pester looked pretty pleased as he put his interpretation on TSB’s flotation on the London Stock Exchange this morning.
The chief executive of the country’s seventh largest bank was overseeing its first steps back to independence as the first block of shares was sold off by Lloyds – which took over the old Trustees Savings Bank in 1995.
And it’s been welcomed by investors. Mr Pester told me even he was taken aback by the appetite for shares this morning as the market opened.
As he watched the screens over the shoulder of a trader he could see shares rocket over ten per cent, confounding some people’s doubts about whether now was a good time to float off the business.
It was the culmination of a period of frenetic activity in London, New York and Boston, meeting major investors to convince them TSB is a bank worthy of their attention.
Lloyds has little option but to sell. As part of the bargain when it was bailed out by the government during the financial crisis it had to hive off a chunk of its business.
The government is keen to see challenger banks take on the Big Four: Lloyds itself, HSBC, RBS and Barclays.
Initially it hoped Lloyds would sell over 600 of its branches to the Co-operative Bank, but when that failed (spectacularly) executives decided it was time to resurrect the old brand TSB – “the bank that likes to say ‘yes’” as the ads in the 1980s and 1990s used to say.
Nowadays, Mr Pester told me, they prefer to be ‘The bank that likes to say ‘no’” – no to investment banking, he explained.
TSB is trying to set itself apart from the old banks – the ones that missold us policies we didn’t need, which manipulated key interest rates, the price of gold (and so on) – and is offering a much simpler banking model: they attract money from savers and lend it back to borrowers.
It’s not quite so simple: TSB offers products like zero per cent balance transfers which only make the bank money if someone misses a monthly payment and is put on to a punitively high rate of interest.
You could say it’s a financial trap.
Is that the sort of product TSB should be known for, I asked Mr Pester. “We’re definitely on a journey,” he said. “Products like that have a part to play. We are changing the way that products work and it will take us a while to work through the whole suite. Watch this space.”
Paul Pester has taken on the task of creating a convincing new challenger bank. It already has six per cent of the mortgage market and hopes to add up to another three per cent by 2017.
He’s persuaded the City that TSB is worth investing in. He’s convinced some customers to join the millions handed to him by Lloyds.
Will it truly be a successful bank, loved by its customers? Watch this space…