TSB – owned by Spanish firm Banco de Sabadell (BME:SAB) since 2015 – has seen its shares emerge unscathed on Wednesday afternoon despite the news that the bank plans to shut 164 branches and cut up to 1,000 jobs across the UK.
Blaming the decline in customers visiting high street banks on the coronavirus pandemic, TSB announced that the store closures were a reflection of the shift in customer attitude towards the more efficient and easy-access online banking systems.
TSB is just the latest in a slew of high street brands to post job losses and store closures this year, following in the footsteps of John Lewis (LON:JLH), Pizza Express (HKG:3396), and WH Smith (LON:SMWH).
The retail sector was hit especially hard by the pandemic as lockdown measures forced thousands of companies to close their doors to customers between March and June. Even as stores reopened over the summer, high street footfall is still well below average for the time of year – 33% less year-on-year according to data collated by the British Retail Consortium (BRC) and Shoppertrak.
High street banks, in particular, have faced mounting competition from online operations, which proved a lifeline for millions in managing personal finances during the peak of the pandemic when access to in-store customer service was reduced.
TSB noted that it has been registering some 4,000 new customers per day on its digital app, compared to just 1,200 before the pandemic, and has seen more than 90% of its transactions handled digitally this year.
Chief executive Debbie Crosbie commented on the company’s announcement:
“Closing any of our branches is never an easy decision, but our customers are banking differently – with a marked shift to digital banking.
“We are reshaping our business to transform the customer experience and set us up for the future.
“This means having the right balance between branches on the high street and our digital platforms, enabling us to offer the very best experience for our personal and business customers across the UK”.
The Unite trade union, which represents TSB employees, stressed that it was not just the bank’s workers, but also its customers, that would be hit by the planned closures.
Dominic Hook, a Unite national officer, warned The Guardian on Wednesday:
“The financial services industry has a social responsibility not to walk away from its local customers who continue to need access to banking in bank branches”.
The job cuts and store closures are not expected to be finalised until next year, but TSB has assured that 94% of its customers would still be located within 20 minutes of a high street branch.
Shares at TSB’s parent company Banco de Sabadell have remained surprisingly resilient despite the announcement, up 4.80% to 0.30 EUR at 14:45 BST, but still down from a monthly high of 0.39 EUR earlier in the month.
Banco de Sabadell has not managed to escape the pressure of the pandemic entirely, however. Its shares have slipped considerably from a peak of 1.07 EUR at the start of 2020, but investors may be comforted in the knowledge that they appear to have levelled out in recent months, staying roughly within the range of 0.26-0.35 EUR.