What would the founder of TSB make of the shambles it has become? 

PETER OBORNE: What would the reverend who founded TSB to help the poor make of the rapacious shambles it has become?

There was a time when High Street bankers were still pillars of the community.

Yes, they were perhaps a bit pompous with their old-fashioned suits and rolled up umbrellas. But they were respected people who served as JPs and school governors. They were heavily involved in local charity work.

They didn’t receive huge salaries and large annual bonuses. Nor did they have private aeroplanes or trophy wives. They lived the same sorts of lives as the rest of us. They owned modest houses and, like us, struggled to pay their mortgages. They were paid the same as doctors or teachers — not footballers or film stars.

They were the sorts of people you went to if you had a problem. They knew that managing people’s money was a great responsibility.

For them, banking — as the word implies — was about safety and conservatism, and not risk.

Think of the High Street banker played by James Stewart in It’s A Wonderful Life. George Bailey, as played by James Stewart, was an essential part of the social bedrock of the community in which he lived. He saw banking as a semi-religious vocation, not as a way of making money.

He wasn’t fashionable, let alone rich. His moral values dominated his life and shaped the world in which he lived. He made sure people’s financial needs were looked after. Bailey sell them a dodgy financial product? Forget it.

Which brings us to the TSB — formerly known as the Trustee Savings Bank. It used to be exactly the same kind of bank as George Bailey’s Bailey Brothers Building & Loan.

It was founded in the early 19th century by the Reverend Henry Duncan as an ‘economical bank for the savings of the industrious’ to help the working people of Dumfriesshire manage their annual wages.

Personal profit was the last thing on the mind of the Reverend, who was also founder and editor of the Dumfries Courier, a splendid newspaper which is still going strong. Even more relevant, Henry Duncan rose to become Moderator of the Church of Scotland. He was a philanthropist who never received any financial reward for his creation of the bank.

He wanted to give his poorest parishioners a chance in life. Not for profit, but because it was his way of serving God.

PETER OBORNE looks at the situation involving TSB (stock image)


In his quiet way, the Reverend helped build the social fabric of Britain.

How utterly different Duncan was then to the modern generation of bankers ripping up his superlative legacy.

I am an admirer of Margaret Thatcher. I think she did many great things to bring back dynamism and entrepreneurship to Britain with her great reforms in the Eighties.

But surely she would admit today that she did too much to encourage a culture of greed when she was PM — particularly in the City of London.

I was a young financial journalist in the Eighties when she controversially approved the flotation of the TSB group on the London Stock Exchange.

The bank’s ownership status was unclear at the time — it was akin to the Co-op, an institution that existed for the mutual benefit of its customers — so it was made into a public company, then sold off.

But once it was floated, its culture changed. Suddenly the TSB was no longer about serving customers. It was about making profits.

My guess is that a George Bailey would have been sacked as a bank manager at the TSB after the float, when shareholders came first. He would have been seen by the hard-nosed bosses as too soft.

In the mid-Nineties, TSB was bought by Lloyds Bank. The moral purpose of Rev Henry Duncan’s bank vanished.

TSB became a profit-orientated concern answerable to shareholders, not customers.

Can someone explain why the current chief executive, Paul Pester, is paid almost £2 million a year? (Admittedly that’s not even much by the standards of most of Britain’s banks.) And why does he get a bonus of more than £400,000?

Something has gone horribly wrong. We discovered exactly how wrong last weekend when many TSB customers suddenly found they couldn’t pay their bills, pay for shopping or sort out their employees’ wages.


Apparently, this has been caused by an information technology meltdown following pressure by the Spanish owner of the TSB — which bought the bank in 2015 after it split from Lloyds — to save costs by moving onto a new IT system before it was ready.

For the current managers of the TSB, profits come first and the customers come last. That’s the only way they can justify their morally obscene multi-million pound salaries.

To be fair to the TSB, it’s not the only bank at fault. In 2011, Bob Diamond, then chief executive of Barclays, received £17 million in pay, shares and perks. He was boss when some of the bank’s derivatives traders were fixing the LIBOR interbank lending rate — which is paramount in determining our mortgage rates — in an effort to help Barclays make even more money.

LIBOR fiddling almost certainly increased mortgage costs for millions. And yet, despite Barclays being fined and individual traders punished, the industry’s behaviour is as egregious as ever.

Only this week, a new survey by consumer group Which? showed that banks behaved disgracefully when the base rate last rose in November.

Rates on loans rose at once. But only one lender in ten made sure savers received the benefit of the interest-rate rise within a month.

Who do these modern bankers think they are? Why do they feel such lacerating contempt for their customers?

It’s only ten years since the rest of us spent £1 trillion stopping them going bankrupt.

I should emphasise that I do not condemn the entire banking industry.

In my first job after leaving university, I worked for N. M. Rothschild’s in the City of London, a merchant bank which drilled integrity and decency into employees.

I remember overhearing one director urging a client against doing a deal which would have earned Rothschild’s thousands of pounds in fees, but in the director’s opinion would have been the wrong thing to do.

It’s important to remember Goodwin’s forebears, says PETER OBORNE: Honest, decent, Scots who had nothing in common with him (stock image)

I should add that the customer service in my local branch of NatWest is helpful, friendly and professional.

But the fact is my heart bleeds over what has happened to the banking profession in the last 30 years.

We know that many bank managers who put customers first have been sacked. They’ve been replaced by sharp-suited, amoral cheapskates paid exorbitant sums for ripping off customers.


One only needs to think of the appalling Fred Goodwin of RBS, who ruined his bank and caused thousands to lose their jobs. He still receives more than £300,000 a year as a pension.

It’s important to remember Goodwin’s forebears: honest, decent, Scots who had nothing in common with him.

For creeps like Goodwin, short-term profits are the only consideration. They are the moral inheritors of slum landlord Henry F. Potter — the villain in It’s A Wonderful Life.

There’s talk that Paul Pester may forfeit his £434,000 bonus. So he should. But he should also give back his grotesque £1.8 million salary.

The brutal truth is that over the last quarter-century, British banking has been captured by a generation of chancers.

They’d do well to remember Gordon Gekko from the film Wall Street, who ended up in prison after his infamous boast ‘greed is good’. Greed is not good. It’s ugly and unfair.

Paul Pester may be on nearly £2 million a year. But he is not worthy to clean the boots of the Reverend Henry Duncan.


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