THE flotation of TSB is another step in the right direction for the UK's banking sector but there remains a long way to go.
For owner Lloyds Banking Group it is a further tick in the box as it moves to meet demands from European regulators, the UK Government, other shareholders and customers.
The smooth running of the initial public offering is in stark contrast to the shambolic end to the collapsed Project Verde sale to Co-operative Bank. Significant problems at Co-op's banking arm have since emerged but that transaction was also dogged by rumours of political interference.
Thankfully there appears to have been no repeat of the latter with TSB. Antonio Horta-Osorio and his team have managed to get the flotation off to a good start, and that in itself is a positive result as appetite for stock market listings has been waning in recent weeks.
A challenger bank with a reasonably sized and located retail estate, 4.5 million customers and a freedom from the legacy issues that have affected the sector would appear to have solid foundations on which to build.
Yet whether TSB can really challenge the dominant market position of RBS, Lloyds, HSBC, Santander and Barclays remains to be seen. It is also emerging into an increasingly crowded sector. Metro, Virgin Money, Marks & Spencer, Sainsbury's and Tesco are all at various stages of rolling out their retail banking offer. RBS will soon have its own offshoot, through the Williams & Glyn brand, which will add further diversity to the mix. In Scotland there is Clydesdale Bank and Bank of Scotland, also owned by Lloyds, and that is before we consider the banking services offered by the likes of Nationwide Building Society.
So TSB will have to offer something compelling to stand out from the crowd. Another factor to consider is that the majority of consumers have little appetite to switch banks, even after the excesses that have come to light in recent years.
While regulatory change has made current account changing easier, it is unlikely to remain high up the "to do" list of most people unless they have had a particularly bad experience with their current provider. Perhaps the real benefit to consumers will be in Lloyds further selling down its TSB stake and moving closer to fully emerging from out of the clutches of the UK Government.
Were Lloyds to get that monkey off its back it would show the bank is moving into the recovery on the front foot. The investment Lloyds has made in its Scottish branches in the past 18 months, along with a commitment to retaining the last bank in town, suggests it still sees a future in the customer service tradition that, once upon a time, made Bank of Scotland one of the most admired organisations in the sector.
Sadly, the chances of a fairytale ending for RBS appear quite distant. There is little sign the UK Government will be able to get rid of its majority shareholding any time soon and predictions from 2008 of a potential lost decade for some financial services firms are beginning to look prescient.
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