Free shares for TSB bank staff

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TSB Bank Branches As Lloyds Banking Group Plc Prepares Unit's IPO

TSB staff are to be handed free shares worth £100 as part of a John Lewis-style reward scheme unveiled by the challenger bank today.

As newly-created TSB Partners, 8,600 employees from the chief executive to front-line branch workers will also be in line for an annual performance-related award that could pay a maximum 15% of salary.

The bank, which is returning to the stock market this month as part of a 25% sell-off by Lloyds Banking Group, said it wants to encourage a sense of shared ownership and safeguard levels of customer service.

TSB reviewed the policies of other banks and drew inspiration from a range of retail businesses, most notably John Lewis Partnership.

For the annual award to be paid, the bank and its staff must achieve customer service metrics and the group itself must be profitable.

A second scheme has been set up that will deliver cash and shares to its executive team over five years to a maximum of 100% of salary.

Chief executive Paul Pester, whose basic salary will increase from £600,000 to £700,000 a year, will be entitled to a maximum potential award of £1.68 million - the equivalent to 65 times the current
average pay of non-managerial TSB staff.

It means that TSB will comply with the European Union guidance that bonuses must not exceed salary, unless otherwise approved by investors.

The £100 of shares will be granted at the time of the TSB float.

Mr Pester said: "I believe a sense of shared ownership amongst TSB staff is key to delivering a consistently great customer service - and to building a thriving TSB Bank.

"I'm therefore delighted that all of our staff will receive £100 of TSB shares and become TSB Partners."

Lloyds is selling about a quarter of the business in the flotation, with up to a fifth of this chunk expected to be sold to retail investors and the rest likely to be snapped up by City institutions. A prospectus for the sale will be published in mid-June.

TSB, famous for its 1980s slogan ''the bank that likes to say yes'', traces its history back more than 200 years. It was floated in 1986 and merged with Lloyds in 1995.

A taxpayer rescue of the group during the financial crisis - following which the Treasury still owns a 25% stake in Lloyds - meant that it was obliged to spin off hundreds of branches under EU rules on state aid.

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