This week has seen TSB return to the high street after an 18 year absence, but what does this mean to its 4.5 million customers and what effect, if any, will it have on the savings market?
TSB Bank consists of 631 former Lloyds TSB, Lloyds TSB Scotland and Cheltenham & Gloucester branches and their customers and will operate as an independent company within the Lloyds Banking Group. Lloyds Banking Group will transfer the business to new ownership through a stock market launch at a later date.
On the positive side, the bank comes into the market fully formed, with experienced staff and a good geographical spread of branches. TSB Bank also has its own Financial Services Compensation Scheme (FSCS) licence, so people have more providers to spread their money between. The bank is also supposed to bring more competition to the market, which should be good news for customers. However, it is difficult to see it providing genuine competition before the bank becomes completely independent from the Lloyds Banking Group, which may not happen until mid-next year.
The not-so-positive news is the confusion for those customers that have been transferred to the new bank, some of whom may not have chosen to do so, if they were given a choice. It is worth noting that the interest rates that customers are receiving on their savings have not been affected by the transfer at this point, although it depends what rate they are receiving as to whether this is a good or bad thing.
In order to see the full effect of TSB Bank on the savings market, judgement will have to be reserved until the bank starts doing its own thing. At the moment, the rates and accounts are the same as the Lloyds Bank equivalents, but presumably this will change in the future. At that point, we will be able to make a judgement as to how competitive TSB Bank is and whether or not savers are happy with its re-emergence.