Skip to main content

Mortgage enhancement serves its purpose and delivers ahead of schedule

17th July 2017


TSB launched back onto high streets across Britain in September 2013 with a mission to bring more competition to UK banking and ultimately make banking better for all UK consumers. 

Three and half years since launch, TSB has cemented its position as Britain’s challenger bank.  The Bank has over five million customers, circa £30 billion customer lending and is now Britain’s most recommended high street bank1

The Mortgage Enhancement portfolio – originally a £3.4 billion residential mortgage loan book – was created in February 2014 to enhance TSB’s profitability and aid the emergence of a strong challenger bank in the UK market, as recommended by the Office of Fair Trading (OFT).  This portfolio, which now contains £1.7 billion mortgage loans, has been returned to Lloyds Banking Group (LBG) early, in June 2017.

The portfolio has delivered £242.8 million profit to TSB in total, including £61.7 million in 2017 – exceeding its £230 million target early.  During this time TSB has grown its franchise business significantly, and the challenger bank is well-positioned to continue this growth by helping more people to borrow well in the future. 

At the end of 2016 TSB had already achieved the lending growth target it set itself at its 2014 IPO – to grow franchise lending by 40% to 50% over a five period year period – three years early. 

Ralph Coates, Chief Financial Officer at TSB, says:  “TSB launched back in 2013 with a mission to bring competition to UK banking and ultimately make banking better for all UK consumers – and we’re continuing to make great progress. 

“The Mortgage Enhancement has done exactly what it set out to do – achieving over £230 million profit for TSB, roughly a year ahead of schedule. We’ve also grown our franchise lending at twice the pace aspired to back in 2014, so TSB is really well-positioned to continue to compete, and to help break the stranglehold the big five banks have on the UK market.” 


Media Contacts


Follow us on Twitter: @TSB_News


Notes to editors


  • 1Source: Independent benchmark study (covering all major banks) conducted by BDRC Continental; sample 15,000 UK consumers, November 2016.

Background on TSB’s Mortgage Enhancement:

  • In September 2013 TSB Bank was created by LBG followed a ruling by the European Commission in November 2009 aimed at bringing more competition to the UK banking market. 
  • In June 2013, at the request of the Chancellor of the Exchequer, the Office of Fair Trading (OFT) reviewed the effect on competition of the divestment of TSB. 
  • The OFT recommended measures to enhance TSB’s ability to compete and its financial stability.
  • As a result of this recommendation, LBG transferred the economic benefit of a £3.4 billion residential mortgage loan portfolio to TSB, effective from 28 February 2014. 
  • This transaction was called the Mortgage Enhancement and was designed to strengthen TSB’s profitability over the medium term, with a target of delivering £230 million profit over a four year period. 
  • The Mortgage Enhancement was subject to a call option such that it could be returned to LBG after the £230 million target had been achieved.
  • These conditions were not expected to be met until 2018, however TSB and LBG have agreed an early settlement arrangement and the Mortgage Enhancement was returned to LBG on 28 June 2017.
  • The Mortgage Enhancement was a separate portfolio of mortgage assets managed by LBG and not branded as TSB.  There is no customer impact as a result of this announcement.

About TSB

TSB was built to bring more competition to UK banking and ultimately make banking better for all UK consumers. TSB only serves local customers and local businesses, to help fuel local economies, because communities thriving across Britain is a good thing for all of us.

We have a simple, straightforward and transparent banking model and make clear on our website how we operate and make money.  We offer the products and services people tell us they want, with none of the funny stuff people normally associate with traditional banks.

Our five million customers appear to notice: TSB is Britain’s most recommended high street bank and was recently identified as one of the top 10 big companies to work for.

For further information about TSB Bank plc, please visit our website.