Britain's newest bank, TSB, has rejected claims that it is too small to compete and says it is winning almost ten per cent of new bank accounts.
The Treasury Select Committee asserted this week that the collapse of the sale of the bank's 630 branches, 180 in Scotland, to the Co-operative and the flotation of a standalone TSB had left the challenger far less able to threaten the big four.
But chief executive Paul Pester said: "We have everything we need in order to enable us to be a competitor in the UK market and to reinforce our position as Britain's challenger bank. The fact that one in ten customers switch to us is a very good sign of that."
Mr Pester said the share was "well ahead of our long-term target" - a six per cent share within five years. TSB is the seventh-biggest high-street bank, with a 4.2 per cent share of the personal-current-account market
The bank said the strong current-account performance had helped it grow deposits by £500 million to £24.2 billion in the third quarter.
The TSB Classic Plus account, launched with a big media campaign on March 31, offers five per cent interest on balances up to £2,000, a higher rate - though lower limit - than its chief rivals Halifax and Santander. The latter two banks, along with Nationwide, are the only net gainers from the first year of the seven-day current-account switching service, according to Payments Council figures published last week - and Halifax is part of TSB's former owner Lloyds Banking Group.
TSB highlighted its Borrow Well marketing campaign, promoting the bank as a responsible lender, and its new mortgage campaign, which offers to pay customers' council-tax for a year up to £2,500. The bank said: "Initial customer reaction to both campaigns is positive."
But the absence of an intermediary channel for its mortgages saw net lending to its historic customers reduce by a further £300 million to £19.1 billion.
Mr Pester said the bank's plans to make TSB mortgages available through brokers from the first quarter of 2015 are on track. The bank aims to grow its balance sheet by up to 50 per cent over five years.
TSB said it had further improved a market-leading online and mobile banking service, and believed itself to be the first UK bank to appoint a chief digital officer, Ashley Machin, to its executive committee. At the same time it had "refreshed" 135 branches in 2014, with a target of more than 260 by the end of the year.
It said that in a recent Which? survey, TSB was ranked best high-street bank for customer service.
Statutory pre-tax profit of £33.1 million was up from £25.7 million in the second quarter though down on the £38.6 million in the third quarter of 2013
Alex Potter, analyst at Mirabaud Securities, said: "We feel that rate of current-account openings may well fall back but the six percent target appears eminently feasible."
The original Scottish-born TSB was swallowed by Lloyds in 1995.
When the Co-op deal fell through, Lloyds floated a 38.5 per cent stake in TSB on the London Stock Exchange in June, followed by a further 11.5 per cent last month.
TSB shares, floated at 290p, were up 3.1p at 262.1p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article