29th November 2019

TSB’s new strategy includes closing 82 branches

TSB’s CEO Debbie Crosbie has outlined the bank’s three-year strategy to restore the Bank’s competitiveness through a relentless focus on better serving its customers. The new purpose-led strategy sets out a transformation programme for the bank to become a simpler organisation to compete effectively, with deeper customer relationships and a better balance of customer channels.

Debbie Crosbie said: "Our new strategy positions TSB to succeed in a challenging external environment at a time when we know customers want something different and better from their bank. With a trusted brand, modern platform, and national presence, TSB is well placed to deliver – but we need to make changes to enable us to compete.

Key priorities:
1. Customer focus
• Over c. £120m will be invested to further build on TSB’s digital channels to provide mobile in-app onboarding/sales, as well as investing in the automation of some of the bank’s branches.
• Refresh its existing lending products to provide new lending offerings. All of the bank’s retail lending will be supported for the first time by new customer level decisioning/underwriting criteria.
• Continue to invest in providing industry-leading solutions that genuinely matter to customers.
• Reshape the size of its branch network to ensure it meets the changing needs of customers. TSB will also invest in self-service in branches and flagship branches. During 2020, TSB will close 82 branches, reducing its branch network from 540 to 454.
• Maintain a geographically dispersed branch network.
• Continue to invest in its business banking offer.

2. Simplification and efficiency
• Deliver enhanced functionality on TSB’s new mobile platform.
• Leverage open banking and the right third-party relationships to improve TSB’s unique offering to customers, encouraging innovation and collaboration with Fintechs and leading product providers.
• Customer journeys will be transformed to make it simpler and easier for customers to do business with TSB using digital-led propositions and data-enriched experiences.
• Give customers the ability to complete transactions themselves in real time, expecting that by 2022 more than 90 per cent of transactions will be self-service.
• A digital led approach will mean three quarters of TSB’s customers will be digitally active over the next three years.
• Streamline head office functions and remove duplication. New ways of working will be introduced to empower employees to work in an agile way.

3. Operational Excellence
• Putting in place an operational framework that will enable the Bank to transition to a more competitive Bank that delivers efficiency through a strategy.
• Conduct risk for all customer banking experiences, both business and retail, will be managed by the TSB Customer Banking Director and operational risk under the Chief Operating Officer.
• Transition away from a diverse range of suppliers managed on its behalf by Sabis to take direct control in the UK with clear accountability by its Chief Operating Officer.
• IT transformation programme focused on stability and cybersecurity.
• Strong underwriting principles will underscore product and service development.
• Prudent capital and liquidity management.

The key financial outcomes delivered by the strategy (2019-2022) are as follows:
• TSB will deliver net cost efficiencies, after absorbing the impacts of amortisation from investment, of around £100m, which will also drive an anticipated improvement of 15 percentage points in its cost-to-income ratio.
• TSB will continue to grow and diversify its lending book with c.5 per cent net lending growth per annum.
• Over the course of the plan to 2022, TSB will incur branch and restructuring charges of around £180m.
• In 2022, it expects profits to improve from the current broadly breakeven position in 2019 to a profit after tax of around £130m - £140m in 2022. At these levels, TSB’s underlying Return on Equity will be around 7 per cent.
• TSB has a robust funding plan to support growth while maintaining a low cost of funds and a strong liquidity position.