, designed by
Thomas Cecil Howitt and opened by
the Prince George in 1933.
Early history of the trustee savings banks From the outset, savings banks were retail finance institutions set up under democratic and philanthropic principles. They sought to create thrifty habits amongst small and medium-sized savers such as craftsmen, domestic servants or the growing proletariat, who were outside the well-to-do market that the commercial
banks served. In the first half of the 19th century,
bank runs or bank collapses were common, so savings banks had no safe outlet for their own deposits. To create trust among potential depositors, the
Savings Bank (England) Act 1817 (
57 Geo. 3. c. 130) required funds to be invested in government bonds or deposited at the
Bank of England. This requirement was extended to Scottish savings banks by the
Savings Bank Act 1835 (
5 & 6 Will. 4. c. 57). An essential feature of a savings bank in the UK was that
depositors should have a guarantee of the nominal value of their savings, so that these could be withdrawn at their full value with interest no matter how long the deposit. Accordingly, the
TSB Trust Company was established in 1967 and a year later the first unit trust issue was offered. Regulatory innovations which allowed the TSBs to diversify their business threatened to erode the deposit base of the clearing banks. But this potential diversification was limited by the restrictive central control of the Exchequer, the National Debt Commissioners and the Trustee Savings Bank Inspection Committee. This type of central control had been designed both to guarantee depositors that the savings banks would remain a secure alternative for their deposits and, by standardising general interest rates and regulations, to make it possible for local trustees to work autonomously. By the early 1960s transactions at retail counters were increasing at around 5% per annum. In 1964 the London Trustee Savings Bank was the first to computerise standing orders, and all account records were put on computer by 1967 – this being the first UK bank to do so. Some other savings banks still worked with leather-bound ledgers, and others used passbooks; either way handwritten record cards piled up in thousands and even the most basic management information and accounting (such as the annual balance sheet) was a huge task to compile, requiring a lot of overtime. The savings banks' administration was thus antiquated and time-consuming. They needed modernization and streamlining.
Amalgamation into a single entity headquarters in the
City of London.In 1970 there were 75 savings banks in a loose association, with £2,806 million in total assets. There was a wide variation in size: five of the banks each had over £100m in assets (together accounting for 25% of the total), 14 had between £50m and £100m (35%), 39 between £10m and £50m (38%) and 17 under £10m (2%). The largest trustee savings banks were based in
London,
Glasgow,
Edinburgh and
Belfast. Those based in the north of England accounted for 50% of total funds, while those in the south of England and Wales accounted for 27%, those in Scotland for 19% and those in
Northern Ireland for less than 5%. Geographical location of the 1,655 trustee savings bank branches was also unevenly distributed, with branch density higher in parts of Scotland and the north of England. In 1978 there was one savings bank branch per 18,000 persons in Scotland, but only one per 75,000 persons in London. There was a similar pattern for individual accounts, with two out of five persons in Scotland having an account at a trustee savings bank, one out of five in the north of England, but only one out of twenty in London and the Home Counties. In 1973 at the time of the report by the
Page Committee, there were still 73 TSBs However some individual TSBs had grown faster than others. The assets of the Scottish TSBs, traditionally the strongest members of the TSB movement, had been growing more slowly than those in
Lancashire,
Yorkshire, the
Midlands,
Wales and the
West Country, which had built up enviable reserves and were anxious to protect their territories. London and southern England remained the areas where the savings banks had little presence. These recommendations were high on the agenda of the newly elected government of
Harold Wilson. But the pace of change was to be slow. Officials at the
Bank of England, with the support of
Sir Athelstan Caröe, then chairman of the
Trustee Savings Banks Association, called for the establishment of a strong central authority to assume many of the control powers vested in the government, bearing in mind the need to build up adequate
capital reserves virtually from scratch. For the government, there was an advantage in widening the TSBs' investment powers only slowly, not least the threat of competition to its own newly created bank,
National Girobank. The ''''
(c. 4) allowed TSBs to offer services equivalent to those of the clearing banks, but it also required that, in the space of one year, the number of independent TSBs was reduced from 73 to 19, under the central co-ordinating authority of the TSB Central Board''. • Birmingham Municipal TSB In 1986, the Central Trustee Savings Bank Limited was renamed TSB England and Wales plc and Trustee Savings Bank plc was renamed TSB Scotland plc.
Flotation In 1986, the shares of TSB Group
plc were
floated on the stock market and the proceeds given to the bank, adding to the
ownership equity – a process described by one commentator as "selling people a gold box in such a way that when they opened it they found the purchase price inside". The original holding company, Trustee Savings Banks (Holdings) Limited, continued to be registered at
Companies House under that name until 2013. The newly formed TSB Group's retail banking operations were consolidated into TSB England and Wales, TSB Scotland, TSB Northern Ireland and TSB Channel Islands, each trading as TSB Bank. In 1989, TSB England and Wales officially became TSB Bank, with TSB Bank Scotland and TSB Bank Northern Ireland becoming its subsidiary undertakings. The Northern Irish business was sold to
Allied Irish Banks in 1991 (trading as
First Trust Bank until 2019) and the Channel Islands business was integrated into TSB Bank in 1992.
Merger with Lloyds Bank TSB Group merged with
Lloyds Bank in 1995 to form
Lloyds TSB. The merger was structured as a reverse takeover by TSB; Lloyds Bank plc was delisted from the
London Stock Exchange and TSB Group plc was renamed Lloyds TSB Group plc on 28 December, with former Lloyds Bank shareholders owning a 70% equity interest in the share capital, effected through a scheme of arrangement. The new bank commenced trading in 1999, after the statutory process of integration was completed. On 28 June, TSB Bank plc transferred engagements to Lloyds Bank plc which then changed its name to Lloyds TSB Bank plc; at the same time, TSB Bank Scotland plc absorbed Lloyds' three Scottish branches becoming Lloyds TSB Scotland plc. The combined business formed the largest bank in the UK by market share and the second-largest to Midland Bank (now
HSBC) by market capitalisation.
Revival of the TSB brand Following its acquisition of
HBOS in January 2009, Lloyds TSB Group was renamed
Lloyds Banking Group. After a provisional agreement to sell the Lloyds TSB Scotland business to
Co-operative Banking Group fell through in early 2013, Lloyds decided to divest it through a stock market flotation. The new
TSB Bank began operations on 9 September 2013, at which time the remainder of Lloyds TSB was renamed to Lloyds Bank. ==See also==