Who is Trustee Savings Bank (TSB)?

Published by Thomas Herold in Banking

'Trustee Savings Bank (TSB)' is explained in detail and with examples in the Banking edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Trustee Savings Bank refers to a now defunct type of British financial institution. It is also known by its acronym TSB. These banks began as savings deposit institutions for those who had only meager financial means. The shares of these banks were not stock market exchange traded. Rather they were something like the mutually owned building societies of Great Britain. A key difference between the two types of financial institutions was that the depositors of the TSB’s did not have any voting rights or ability to direct the organization’s managerial or financial goals and direction.

In consequence for a lack of owner-voting rights, the boards of directors for the Trustee Savings Banks were appointed as volunteer basis trustees. This explains where the name for the TSB’s came from in the first place. Reverend Henry Duncan from Ruthwell in Dumfriesshire established Britain’s very first TSB in Scotland. He set this up to help out his poorest members of the congregation in 1810. The only reason for the organization lay in serving the local community members.

During the inter-war years a hundred years later, the Trustee Savings Bank model demonstrated that it could effectively compete throughout the retail banking model market with the major commercial banks and building societies throughout the nation. At one point by 1919, these types of financial institutions counted an impressive 100 million British pounds in combined deposits and assets. This amount reached 162 million pounds by 1929 and an incredible 292 million pounds at the outbreak of the Second World War in 1939.

Despite enjoying two centuries of success and growth as independent institutions, the Trustee Savings Banks became combined into one financial institution called the TSB Group plc from the years 1970 to 1985. Their stock traded on the famed London Stock Exchange until 1995 when the group merged with the Lloyds Bank to become the enormous conglomeration Lloyds TSB. At that moment, the new Lloyds TSB combined unit represented the largest bank in the United Kingdom by market share. It was second only to HSBC by market capitalization, as HSBC has absorbed Midland Bank in 1992.

The group which now represented the legacy of the Trustee Savings Banks expanded again in 2009 with the acquisition of the HBOS Halifax Bank of Scotland group. Its name changed again to the Lloyds Banking Group at this point. The TSB name was not lost, as the primary retail banking subsidiaries were Lloyds TSB Bank and Lloyds TSB Scotland. Lloyds again resurrected the TSB name and brand when it divested the 632 branches from Scotland, Gloucester, Cheltenham, and some of the Welsh and English Lloyds TSB bank branches into the TSB Bank plc.

The new operation came into being on September of 2013 and underwent an IPO initial public offering during 2014. The rest of the Lloyds Banking Group changed its name back to Lloyds Bank. This spin off happened because the Lloyd’s Banking Group had to be bank rescued by Her Majesty’s Government. Thanks to the 43.4% government stake in the group as a result of the Global Financial Crisis, European Union state aid rules required that it spin off a portion of the business.

Trustee Savings Bank plc did not continue for long as an independent entity. It began life in 2013 with a national network of 631 bank branches throughout especially Scotland, and also England and Wales. They counted over 4.6 million customers as well as more than 20 billion British pounds worth of customer deposits and loans. The group had its headquarters in Edinburgh, Scotland.

As the reestablished TSB, the group had a listing on the London Stock Exchange and remained a member of the FTSE 250 index of British based companies until it received and accepted a takeover bid from Spanish-based bank Sabadell. Sabadell made its offer for TSB Bank in March of 2015 and completed the acquisition of the last remaining Trustee Savings Bank on July 8, 2015. TSB Bank still operates as a wholly owned subsidiary of Sabadell, so the TSB brand name remains.

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The term 'Trustee Savings Bank (TSB)' is included in the Banking edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.