Could TSB be sold in the blink of an eye? Wags in the City dubbed it “the bank that likes to say si” as its directors fell over each other in an almost unseemly rush to accept a £1.7 billion takeover by Spain’s Banco Sabadell.
Assuming the nitty-gritty details are worked out, the deal will put paid to TSB’s independent life just 18 months after the chain was spun out of Lloyds, making it one of the shortest lived standalone banks in history.
It was only last year that TSB’s newly minted management team was banging on about creating an ethical bank comparable to Fairtrade coffee, without a City trading floor to gamble away customers’ savings on derivatives.
TSB trumpeted an enlightened attitude towards small business borrowers and a culture of modest staff bonuses, although Paul Pester, its chief executive, took home a tidy £1.9 million last year.
Whether these splendid pledges will endure under the ownership of Sabadell, a rather obscure Catalonian lender, is uncertain. But a quick exit at 340p a share will be almost impossible to resist for Lloyds, which still holds 50 per cent of TSB and will be salivating at such a premium on the 260p flotation price. As far as TSB is concerned, this will be a case of “show us the money” — or “mostrar nos els diners” in the Catalan tongue.
Advertisement
Blood in the aisles
If anybody needed a reminder of the ferocity of competition among supermarkets, messy figures from Morrisons and Waitrose provided shuddering enlightenment. It’s a battle to the death in Britain’s grocery aisles.
Morrisons slumped to a loss after a crushing property writedown and a 5.9 per cent drop in same-store sales, the deepest ever contraction, remarked analysts at Shore Capital, at a mass-market superstore operator.
Waitrose, which has been winning market share by focusing on an upmarket escargots-and-prosecco crowd, revealed that keeping its tills ringing has been costly: profits slumped by 24 per cent as the John Lewis-owned grocer cut prices on key foods to remain competitive with the likes of Tesco and Asda.
Advertisement
Mark Price, the Waitrose boss, acknowledges that he is facing the toughest challenge of his career. He’s not too badly placed; his brand has a clearly defined niche and is targeting affluent, often older, shoppers who have escaped the worst of austerity. The middle classes will always need brie, pomegranates and smoked salmon.
The hole occupied by Morrisons is miles deeper. Although the chain reckons it is known for its fresh fruit and vegetables, to casual shoppers its differentiation from Asda, Tesco and Sainsbury’s is marginal. In truth, it competes on value but has the shallowest pockets of the big four to fund a price war.
It’s not all bleak: Kantar market share data suggests that the momentum of Aldi and Lidl, at the cut-price end of the market, is slowing and consumers are beginning to feel a little better about spending more. Morrisons has a new boss arriving on Monday and a glance at Tesco’s share price, up 26 per cent this year, indicates that a savvy, swashbuckling incoming chief can revive the momentum of a flagging retailer surprisingly swiftly.
In the doghouse
Advertisement
My job, explains Rupert Soames, the new boss of struggling Serco, is to go into the stables, find the manure and put it outside — rather than standing around analysing a heap of smelly stuff.
Understandably, he’s not keen to dwell on the reasons why his predecessor left the outsourcing company in such a mess that it is scrambling to raise £555 million in a deeply discounted rights issue. Every sailing accident, points out the patrician business chief, has a combination of causes, rather than a single point of blame.
Serco grew too fast, with too few controls. It took on anything from running Australian immigration detention centres to child protection, maintaining Britain’s nuclear deterrent and operating London’s cycle hire scheme. There was too much focus on winning deals and not enough attention on the fine print of contracts.
Mr Soames has had a tough start — shareholders didn’t much like yesterday’s fundraising. At least he’s had the good sense, though, to turn down a £908,000 bonus which would have been inappropriate in such straitened circumstances. Though Mrs Soames may not be quite so impressed, he admits.
“I was rather hoping my wife wouldn’t find out. I suspect I’m going to get a rough time tonight.”
Advertisement
Reach for the stars
Congratulations to Ben van Beurden, the boss of Shell, whose €24 million pay package raises him to No 2 in the FTSE 100 pay league, bettered only by WPP’s Sir Martin Sorrell. The oilman’s earnings include a hefty chunk of tax paid by Shell to the government but still, the sum would buy enough Shell petrol to drive 176 million miles — that’s enough to get to Mars, although sadly, not sufficient to return.