The UK economy could shrink by 35% in the second quarter of this year and unemployment could hit 10%. Tens of thousands of small and medium sized businesses are going to collapse, even with the Government’s support packages, as the coronavirus lockdown measures take their devastating toll. There will be a bounce back but economists are arguing over how long that will take.

Debbie Crosbie had admitted that TSB’s new strategy – which she announced only a few months ago – is now dead in the water. The key performance indicators driving that strategy will need to be changed to reflect the world post the COVID-19 pandemic. That work is happening now but let’s be clear: the business is going to take a massive hit and costs are going to be the main lever TSB will try to control. The ‘aspiring middle’, to quote TSB’s strategy, is going to be replaced by the ‘surviving majority’.

Branches Are The Next Big Idea

There will be some in TSB who will fail to grasp the lessons of this pandemic and will adopt strategies that will harm the bank in the long term. We can see this happening already. In her recent ‘Stand-Up’, Debbie Crosbie was quick, some would say too quick in the circumstances, to highlight the fact that the pandemic had created a number of opportunities for TSB, particularly in its move to digital banking at the expense of branches. The digital banking marketplace is massively overcrowded and TSB, with its cost base, will never be able to compete exclusively in that space. And why would it want to anyway? The digital players have been largely absent from this crisis and the weaknesses of their business models – namely no ‘bricks or mortar’ – have been clear to see. Customers, especially business banking, want banks with a high street presence, especially at times of emergency and that’s why they are key to TSB’s business model. Research shows that even those customers who use digital channels exclusively want the reassurance that branches will be there should they need to use them. There will always be digital start-ups who can offer fancy cards and cheap marketing gimmicks but those will not be around for the long-term, whereas TSB will be.

In fact, now would be a good time for TSB to reverse the branch closures it announced last year and commit not to close any more branches until the end of next year at the earliest, when this pandemic will be over. That would differentiate TSB from the other banks.

The Future Of Work In TSB

The second area Ms. Crosbie talked about in her ‘Stand-Up’ was flexible working and the different ways TSB is now interacting with customers.

She said it would be “criminal”, her word and not mine, not to take advantage of these new working practices once the corona-crisis is over. More flexible and home working for staff working in head office locations seems inevitable. Equally, many staff in branches are now interacting with customers digitally and through the telephone for some specific areas of activity that could become permanent. How that will work without putting extra pressure on branch staff will need to be discussed with the union.

We will cover some of these issues in more detail in a forthcoming Newsletter.

0% Of Nothing, Is Still Nothing

Giving up something which you know is not going to be worth very much is no big sacrifice in the current climate. There will be some who argue that it’s very cynical especially when you have a 99-year old war hero walking the length of his garden 100 times raising more than £26 million for the NHS. Which sacrifice will we remember?

Debbie Crosbie spent a lot of time explaining why the Bank’s Executive Committee are voluntarily giving up their bonus awards for 2020. She didn’t say which bonuses they were giving up because the Executive get two bonuses: the TSB Award (which everyone gets) and the ‘New’ Award, which only a few senior people get. And we suspect that the 2020 TSB Award would be severely reduced because of COVID -19 anyway. So, what the Executive Committee are actually giving up is not very much at all.

We would have been more impressed, and so would staff, had Ms Crosbie and her Executive Committee given up some of their very large basic salaries. Ms. Alison Rose, the Chief Executive of RBS, is giving up 25% of her salary and will get no bonuses for 2020. Nathan Bostock, Santander’s UK Chief Executive is donating £1million of his total salary to charity. Joe Garner, Chief Executive of the UK’s largest building society, Nationwide, has opted to reduce his pay and pension by a fifth. He also agreed to sacrifice any bonus which may be due for him for the financial year 2019-2020. According to Nationwide the reduction in his base salary and pension equates to a cut of around £228,000.

Over to you Debbie.

And we’ll deal with Ms Crosbie’s pension payment in our next Newsletter.

Members with any issues they would like us to deal with on this should contact the Union’s Advice Team on 01234 716029 (choose Option 1).

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