The boss of TSB has told Sky News that he wants to make “an aggressive move” into lending more money to Britain’s growing number of small businesses.
Paul Pester said there wasn’t enough competition in the business lending market, claiming the UK’s five biggest banks “don’t have an incentive to compete”.
He said: “We see ourselves as a challenger bank with teeth and we will be as aggressive as possible when it comes to small business lending.”
He said the market was not working properly at the moment because it was dominated by the “big five” – Barclays, HSBC, Lloyds, RBS and Santander.
Mr Pester said: “The big five treat these new banks in the same way they treat retail customers, even though they have different needs.
“The big five don’t have an incentive to compete. They don’t show any sign of competing properly.
“Our intention is to help Britain’s small businesses by offering something new.”
Mr Pester confirmed TSB would attempt to win a grant from the £750m “Challenger Fund” set up by RBS to encourage more competition in the business lending market – as part of RBS’s deal with the EU linked to its bail-out.
Image: Mr Pester questioned whether funds for challenger banks should go to the likes of Santander
He said: “If we get one of the bigger grants from RBS then we will use every penny of it to help support small businesses and to make it as uncomfortable as possible for the big five.”
The fund is open only to banks with a balance sheet of less than £350bn in the UK, which means that Santander could apply for some of the funding.
While Mr Pester said he could not comment on the ambitions of other banks, he did tell Sky News that “it would seem off to me if a member of the big five, by any standards, ended up with a share of those grants”.
His comments come on the day that TSB, which is owned by Spanish bank Sabadell, announced pre-tax profits of £134m for the nine months to the end of September.
That figure is down on last year, when TSB’s profit benefited from the sale of its stake in Visa Europe.
Strip out that anomaly, and TSB’s profits are broadly flat.
The bank says it is growing rapidly, adding an average of 1,000 accounts each day and pushing its total of customer deposits beyond £30bn.
However, it says its ambitions remain hamstrung by the lack of competition in the British high-street banking industry.
“If you look at the number of people switching, it is down this year, and it was down last year,” said Mr Pester.
“The UK banking market is not competitive.
“The big five blame it on customer inertia but they have kept customers in the dark.
“Customers don’t get bills that show the amount they have paid and customers with overdrafts – the people who really might benefit from switching – find it almost impossible to switch accounts.”