TSB needs three-year turnaround before potential sale, Sabadell says

Challenger bank TSB could be sold but must undergo a turnaround and cut costs first, its Spanish owner Banco Sabadell has said.

Sabadell chairman Josep Oliu said TSB needed three years to get back on track but that a merger or a sale were options.

Read more: TSB falls to £105m loss after IT disaster

The company also said it had been forced to postpone its profitability target by one year to 2021 because of TSB’s IT crisis last year.

The UK bank had to hire more than 2,100 staff to fix the issues, which saw up to 1.9m prevented from accessing their accounts for several weeks – in total the meltdown cost the bank £330m.

“TSB is a retail bank with a costly structure, it has to be turned around, for that it needs three years, an adequate return (on equity), then it can be a candidate to enter into a consolidation process,” Oliu said.

“A merger or a sale are options,” he added.

Read more: More customers leave TSB than any other bank, data shows

Sabadell said TSB would not positively contribute to its earning until 2020.

The UK challenger bank’s incoming chief executive Debbie Crosbie is expected to work on a new strategy to cut costs when she takes up the role in the coming weeks.

In its full year results, TSB reported heavy losses of £105.4m following the IT chaos which prevented up to 1.9m from accessing their bank accounts for a number of weeks last year.

Around 80,000 customers left the bank over the course of last year, it said.

The bank pledged to emerge stronger after its “most challenging year” despite the threat of potential regulatory fines on the horizon.