TSB staff and bosses to share £29.8m bonus pot after record profits
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TSB’s 5,700 staff and executives are to share a 10% bigger bonus pot this year, after rising interest rates pushed the bank’s annual profits to record highs.
The high street lender confirmed the pool had risen to £29.8m, up from the £27m distributed a year earlier. For most staff, that will mean collecting bonuses worth 11.8% of their pay, compared with 10.2% a year earlier.
However, the chief executive of TSB, Robin Bulloch, will receive a £782,000 bonus, nearly matching the £875,000 he was paid in salary and bringing his total pay to £1.8m for 2022. Bulloch took over as chief executive last April after Debbie Crosbie left for Nationwide.
The once-beleaguered bank, which experienced a large-scale IT meltdown in 2018, reported a 16.5% rise in annual profits to £182.5m for 2022, as rising interest rates meant it was able to charge more for customer loans and mortgages.
The rise in profits and payouts comes despite the Financial Conduct Authority hitting TSB with much-delayed £48m fine in December in relation to the botched IT migration that left millions of banking customers locked out of their accounts for weeks in 2018 and resulted in the resignation of its then chief executive, Paul Pester.
TSB’s pay committee is understood to have taken the FCA fine into consideration when deciding the size of staff bonuses.
While the strong performance was linked to a rise in lending and interest rates, executives also said it was the culmination of a three-year turnaround plan that involved sweeping cost cuts and branch closures across the UK.
Bulloch said that while the bank had yet to see signs of significant financial distress from its customers, it was preparing for potential turmoil in the economy. That could include a 10% fall in house prices this year compared with 2022, the bank said.
“Obviously, we are operating in a very uncertain environment,” Bulloch said. “And for anyone in a job like this in recent years, it’s been challenging to make accurate predictions about the UK economy. But one thing I do have huge confidence in … is that we stand ready to support our customers through this period.”
In the meantime, the bank is on track to pay its Spanish owner, Sabadell, a dividend for the first time since it bought TSB from Lloyds for £1.7bn in 2015.
The £50m payout is likely to quash further speculation that TSB could be put up for sale again. Sabadell was believed to be exploring a sale in 2020, having hired Goldman Sachs to review the business after the IT meltdown, which resulted in a pre-tax loss of £105.4m in 2018.
However, Sabadell appears to have had a change of heart, having rebuffed a £1bn approach by the Co-operative Bank last November.
“Sabadell have been crystal clear they have no plans to sell TSB and in fact I think they are looking at the results we’re delivering with great pride,” Bulloch said. “They’ve been unequivocal around this position, which is that they see TSB as an integral part of Sabadell.”