LONDON/MADRID (Reuters) - British bank TSB said it will shut 82 branches next year, or 15% of its network, in a turnaround plan that aims to save a total of 100 million pounds ($128 million) by 2022 and which a source said could mean the loss of up to 400 jobs.
The bank, whose roots go back about 200 years, was bought by Banco Sabadell for 1.7 billion pounds in 2015 as the Spanish bank sought to expand into Britain.
The move backfired when IT glitches sent TSB’s costs spiraling, forcing Chief Executive Paul Pester to resign amid complaints from customers and lawmakers over the fiasco.
TSB said on Monday it was cutting the branches as more customers were banking online. New CEO Debbie Crosbie said the bank would likely close more in the future.
TSB is following a blueprint set by larger rivals, such as Lloyds (LLOY.L) and RBS (RBS.L), by reducing its branch network and plowing 120 million pounds into digital channels to fend off upstart online rivals.
The bank did not give details on potential job losses from the branch closures, but a source familiar with the plans said about 300 to 400 positions would be affected by the cuts.
TSB employs nearly 8,000 staff in Britain.
“The decision by TSB to abandon 82 local community bank branches is absolutely deplorable and a tragedy for the banking sector,” said Dominic Hook, national officer at employee union Unite, which is campaigning to keep bank branches open.
He said the decision would have a disastrous impact on local businesses and vulnerable customers.
Announcing its mid-term strategy for 2019-22, TSB said it aimed to improve its cost-to-income ratio by 15 percentage points by 2022, in a bid to deliver a profit after last year’s loss.
TSB said it was aiming for a profit after tax of 130 million to 140 million pounds by 2022, from a breakeven position now.
Restructuring charges will amount to 180 million pounds.
Since Sabadell bought TSB in 2015, the outlook has darkened amid uncertainty surrounding Britain’s planned departure from the European Union and due to low interest rates, making it tough to deliver a quick turnaround.
Sabadell Chairman Josep Oliu said this year TSB needed first to cut costs before potentially becoming a candidate for a sale or taking part in any consolidation in Britain.
Oliu said TSB was not expected to contribute positively to group’s earnings until 2020.
TSB was hit by fresh IT problems on Friday that meant thousands of customers woke up to find wages and vital payments had not reached their accounts.
The IT failure came just days after TSB was heavily criticized in a law firm report for its handling of last year’s crash, which locked nearly two million customers out of their accounts.
Reporting By Lawrence White in London and Jesús Aguado in Madrid; Editing by Jose Elias Rodriguez and Edmund Blair