Lloyds boss says 'leadership is a lonely thing'
There is a new bank coming to town with an old name.
It has just been created by Lloyds, and as of next Monday you will see it, or rather you will see 631 branches re-badged as TSB branches.
This is the cosmetic part of a more fundamental process of breaking up Lloyds, ordered by the European Commission, to create a bit more choice for customers and more competition for the UK's giant banks.
The reborn TSB already exists as a legal entity, with its own board (though the chairman hasn't yet been chosen).
It is already in charge of its own strategy, and as of the middle of next year it will become properly independent, when it is floated on the stock market.Not overjoyed
This morning, I interviewed Lloyds' chief executive, Antonio Horta-Osorio, about the the creation of what he described as the eighth biggest bank in the UK, which will have 5 million customers with savings of £25bn, and only 20 fewer branches than Lloyds' famous Halifax network.
In his first television interview since becoming Lloyds' boss in January 2011, he acknowledged (perhaps to state the obvious) that he isn't overjoyed to be reversing the process of UK banks becoming ever more enormous.
"It is quite painful. Lloyds has 30 million customers as a whole, therefore to lose 5 million customers is to lose a sixth of the total, which is quite important" he told me.
"And in terms of branches we have 3000, so to lose 630 is to lose slightly more than a sixth".
And making a new bank - with all its vital IT and expensive infrastructure - is not cheap. "We expect this to cost us between £1.3bn and £1.5bn pre-tax, which is the cost of setting up the whole bank - because as of 9th September the bank will be operating absolutely independently on the high street", he said.
There is something rather odd about the idea that as of next Monday, many millions of Lloyds customers will find themselves cast out into the TSB.
Shouldn't they worry that their savings will be more at risk in a smaller, younger bank?
"I don't think so", Mr Horta-Osorio said. "The bank has probably the highest capital ratio on a clean basis in the UK," (which means it has a big buffer against potential losses).
"It has the unique situation of no legacy issues, so no PPI, no interest rate swap (complaints), because all of those issues have been assumed by Lloyds. And second it has no toxic assets from the acquisition of HBOS," he said.
In other words, TSB can be seen perhaps as a bank not tainted by the sins of the past.
And, unlike Lloyds, it will begin life with loans no greater than the value of its deposits - so it will not be borrowing from investors, and will therefore be less vulnerable to powerful money managers deciding that they don't like the cut of its jib (which is part of what sunk HBOS, the huge loss making bank rescued by Lloyds and taxpayers in the autumn of 2008).Customer options
But some Lloyds customers, as they have told me on Twitter, don't like the idea of being marched off into a new bank.
What can they do if they don't want to join the TSB?
"If customers want, after the transaction is closed, they can close their accounts with TSB and move to Lloyds, or they can close their accounts with Lloyds and go to TSB, either of the two".
He hopes there won't be much of that migration, because he believes that the separation of TSB will be what he calls "seamless" - which means that customers should not experience any disruption of service, or inconvenience, when the big separation happens next week.
And for those customers who tell me they are bemused about why they have been selected to go to TSB, or not selected, he insists it is nothing personal.
What Lloyds decided, in negotiation with the European Commission, is that the branches going into TSB would be those of the former Cheltenham & Gloucester Building Society and of Lloyds TSB Scotland (two firms bought by Lloyds yonks ago) and other branches selected on the basis that they "replicate Lloyds footprint in England and Wales".
So if you happen to bank at those branches, you are on your way to the TSB.
There were a couple of other things I wanted ask him about.Scotland strategy
One was whether the outcome of the referendum on Scottish independence would have an impact on Lloyds very substantial operation in Scotland - where the bank has its registered office (or home, in a legal sense), and where it employs 17,000 people.
More precisely, if Scottish people vote for independence, would Lloyds retain its registered office in Edinburgh?
"That is a question we are monitoring quite carefully. Scotland is very important for us.
"We are monitoring what the Scottish people will want to do, and we will make a plan accordingly. We haven't yet concluded our analysis," Mr Horta-Osorio said.
Did he fear that if Lloyds was perceived by its creditors to be a bank located in a small economy, an independent Scotland, with fewer resources than Britain for bailing out banks in a crisis, the cost of borrowing for Lloyds would rise?
"It depends on how you organise geographically, how you have your legal vehicles, there are several solutions for that", he insisted.'Lonely' leadership
And then I asked him about whether life at the top of a big company like Lloyds can be too stressful, too burdensome.
This is a resonant issue right now, following the recent suicide of Pierre Wauthier, chief financial office of the huge Swiss insurer, Zurich Insurance.
Horta-Osorio is in a special position to answer this, because at the end of 2011 he was ordered by his doctors to take six to eight weeks off work, having been exhausted by the stresses of trying to rehabilitate Lloyds.
"Leadership is a lonely thing" he said. "When you have to make tough decisions in relation to strategy or very important issues you have to take them in the end alone.
"Responsibility increases the bigger and more difficult the situations are.
"In turn-around situations, such as in the case of Lloyds, you really have to make very tough decisions in critical moments and they normally can't be collegiate."