The Future Of TSB
It seems that the writing is on the wall for the future independence of TSB.
The news that Spain’s second biggest bank BBVA has pulled out of merger talks with Sabadell because they couldn’t agree a price, confirms our worst fears: that TSB will be sold off. The Spanish Government has made it clear that it wants consolidation in the banking sector as a response to both “low profitability” and “credit, market and operational risks”. It’s not going to be BBVA this time, not at the moment anyway, but don’t be surprised if another Spanish bank comes knocking on the door. In response to the breakdown of talks, Sabadell has said that it will launch a new strategy to “concentrate on its domestic business”. Ominously, Sabadell also said it would: “analyse strategic alternatives for creating shareholder value with regard to the group’s international assets, including TSB”. The Financial Times said: “Someone will snap TSB up, providing the price is low enough to reflect its troubled history and small scale”. And the sharks have already started circling TSB. It was reported at the weekend that a number of private equity firms have already shown an interest in TSB. The big UK banks won’t be able to bid for TSB, for competition reasons, but expect the likes of Clydesdale Bank to show an interest in any sale. And that’s why TSB rushed through the latest round of jobs cuts and branch closures, and why it is putting so much pressure on staff to boost sales. TSB wants to be in the best possible financial position when it’s put up for sale, probably later next year.
Whenever there is a merger or a takeover it’s always the employees that lose out. It will be no different this time. We can expect a lot of head office jobs to become redundant and more branches will be closed. The Competition and Markets Authority will have an important role to play in determining who buys TSB, assuming there’s a sale, and we will want to make sure that the interests of staff are not lost in the rush to make money.
Debbie’s Pension Pot.
Whilst on the subject of excessive executive pay, the Investment Association, whose 250 members together run £8.5 trillion of assets, has written to businesses telling them to bring the retirement benefits that their bosses get into line with the arrangements for staff. The IA has said that it would issue a “red top” alert to investors about businesses that give directors a pension contribution of 15% or more and don’t have plans to align pension contributions with the majority of staff by 2022.
Members will recall from a previous newsletter that we reported that the Chief Executive, Debbie Crosbie, received a pension allowance of £122,115 or 17.7% of her basic salary. TSB staff are in a defined contribution pension scheme and the bank makes contributions of between 8% and 13%. The vast majority of staff get employer contributions of either 8% or 10%; significantly less than the 17.7% awarded to Mrs Crosbie.
The TSB Board should reconsider Mrs Crosbie’s pension allowance and align it to what the vast majority of TSB staff receive. A pension allowance of 10% on a salary of almost £1 million a year is more than enough for anyone in the current environment.
Members with any questions should contact the Union’s Advice Team on 01234 716005 (choose Option 1).