TSB, the British lender owned by the Spanish Sabadell, is set to cut jobs and close branches to improve its efficiency, the CEO of the Spanish bank said during a press conference on Thursday, after TSB set aside restructuring costs of £29 million.
British banks – including rivals Barclays and Lloyds – have ramped up cost-cutting measures in recent months amid challenging economic conditions and higher interest rates, despite a period of robust profits for the sector.
The restructuring costs set aside by TSB in the 2023 results released Thursday include £24.4 million ($30.88 million) in estimated employee redundancy costs, the majority of which will fall this year, the bank said in its annual report.
When asked whether this would involve staff and branch reductions, Sabadell’s CEO, Cesar Gonzalez-Bueno, told reporters: “Yes, it will include both.”
TSB declined to comment on the origin of the cuts.
TSB reported a 71% annual increase in its net profit in 2023, to £175 million, and ended last year with an efficiency ratio of 73.6%, down from 78.5% in 2022, but still higher than its peers in the UK.
Ms. Gonzalez-Bueno said that details of the planned reductions would be announced by TSB in due course, but that the aim was to bring the efficiency ratio – which measures the relationship between a bank’s costs and revenues – down to 60%.
A lower efficiency ratio indicates that a company is better able to generate revenue while keeping expenses low.
By the end of 2023, TSB had 5,426 employees, down from 5,482 in 2022, and the number of branches had been reduced by nine to 211.
Sabadell’s acquisition of TSB in 2015 for £1.7 billion faced difficulties nearly six years ago when IT problems caused costs to soar. The Spanish bank, which announced a record net profit of €1.33 billion for 2023 on Thursday, froze its plans to sell TSB until it had turned around the business.
Asked Thursday whether cost-cutting would be part of the Spanish bank’s plans to sell TSB, Ms. Gonzalez-Bueno said: “We are not preparing the sale of TSB: We are not preparing the sale, we like our perimeter.”