Following the Government's acceptance
of the Page Committee's views, the TSB movement began to implement some of the structural recommendations, ahead of the necessary
legislation relating to other aspects of the four proposals. By a process of amalgamation, over 70 TSBs were reduced to 17 by November
20th 1976. At a local level, the three small TSBs surrounding Birmingham (Coventry, Walsall, and Wolverhampton) amalgamated to become
TSB of the Midlands.
The TSB Central Board was established with representatives from each of the newly amalgamated
TSBs, and recruitment of staff for its premises in London was begun. While the banks began to gear themselves for a wider range of
services including personal loans, links were established with the various authorities, clearing houses etc, that were used by the
clearing banks in London to facilitate those wider range of services.
It was agreed that the Ordinary Savings Account of TSBs (the
equivalent of BMB's No 2 Department) would continue in its existing form, including the tax relief concession on the first £40 of
interest, for three years. However, the investment of these funds with the National Debt Commissioners (in the Fund for the Banks
for Savings) was to be run down over a longer period - to 1986.
The freeing of the TSBs from its historical monitoring and control
by the Government was also staged over a number of years, with the authorities particularly concerned to see the banks building up
their level of reserves. The Government did not wish to provide any fiscal support for the developing banks, but were keen to see
that they progressed to the point where they would be able to compete on equal terms with the joint stock banks and other financial
institutions. Building on the start TSBs had made in recent years in introducing approximately 700,000 cheque accounts, the Government
envisaged that the greater freedom given to the banks, with some ten million customers, would result in a much wider sector of the
community being able to take advantage of money transmission and related facilities. This new positioning of the TSBs was labelled
as creating a 'third force in banking, a third force that was mutually owned'. It was generally assumed that the other 'two forces'
were the clearing banks and National Savings.
The implementation of the recommendations made by the Page Committee was made by the
Government passing the Trustee Savings Banks Act 1976. This was largely an amending and enabling Bill that built on the existing Trustee
Savings Banks Act 1969. Consequently, the Act's amending clauses implemented the transitional controls referred to above. But a key
clause in the Act empowered each Trustee Savings Bank to carry on the business of banking; it was this clause that enabled the banks
to extend their services, including the granting of credit. (see Mortgage Lending as a TSB
The final Annual Report of the Birmingham
Municipal Bank, for the year ended March 31st 1976, summarised how these sweeping changes would bring about the most fundamental series
of alterations in the Bank's history:
Following the publication of the Page Report on national savings which made far-reaching recommendations
regarding the restructuring of savings banks, new legislation was introduced into Parliament removing many of the restrictions under
which these banks have always operated and allowing them to extend their services, particularly in the area of credit. The main provisions
of the Trustee Savings Banks Act, 1976 will take effect on 22nd November, 1976.
In order to make these new services available to customers
of this Bank the Birmingham Municipal Bank closed its doors on 31st March, 1976 and on the following day a new bank - the Birmingham
Municipal Trustee Savings Bank - opened for business. This new Bank will continue to provide all the services which the old Bank developed
in addition to those to be available under the new legislation. To preserve the special relationship with the City, provision is made
in the Act for the Trustees of the new Bank to be appointed and removed by the District Council.
As reported in the May 1976 edition
of the TSB Staff Magazine Banknotes (under the Heading 'OPEN FOR BUSINESS: THE BIRMINGHAM MUNICIPAL TSB') the new Bank was the first
TSB for 25 years:
THE FIRST NEW TSB - amalgamations excepted - since 1951 (Bristol) has come into being ... the Birmingham Municipal
Trustee Savings Bank, a regional bank in its own right.
In a statement specially for Banknotes, its general manager, Mr J W Hoccom,
"On March 31, the Birmingham Municipal Bank, a striking and unique example of civic enterprise, ceased to operate as a
department of the local authority and all accounts of its depositors were transferred to a new bank, the Birmingham Municipal Trustee
Savings Bank, which opened for business on April 1.
"Both the change and the Council decision which initiated it are historic,
when one realises the intense local pride felt for the BMB and its growth in less then 60 years from a modest beginning to a savings
bank with over 70 branches in and around Birmingham, holding almost £140 million of the savings of local citizens in over 400,000
"The decision of the Birmingham Council to form a TSB to replace the BMB was taken after an intensive examination
of the situation arising from the Government's acceptance in 1974 of the recommendations of the Page Committee in regard to TSBs.
Council felt that the Birmingham bank's depositors should be able to share in the wider facilities soon to be offered by the whole
TSB Movement but which would be denied them if the BMB remained as a local authority department.
"It was also realised that the
future progression of the bank depended upon its maintaining a competitive position in the savings bank field.
"It is interesting
to note that the link with local government has been preserved by the provision in the TSB Act 1976 allowing for the appointment of
all trustees of the new bank by the Council, a situation which comes close to the Page concept of depositor representation on Boards
of Management of TSBs.The link is further reinforced by the retention of the word 'Municipal' in the title of the bank.
changeover to TSB status has been accepted by depositors with a minimum of comment or enquiry. The recent, highly successful TSB television
campaign made a considerable impact in Birmingham, familiarised the TSB name and logo locally and no doubt contributed to what proved
to be an almost uneventful change.
"One humorous note was struck shortly after April 1, when a lady depositor of long standing
stated firmly that she wanted nothing to do with any new bank and preferred her account to stay as it was.
"When, in reply to
the manager's question, she confirmed that she had seen the Gordon Jackson advertisements on television and was told that the bank
was now a TSB, she replied: 'Oh, you're that one are you? That's all right, then!'
"Following the formation of the new Birmingham
bank, one more step remains to be taken - to discuss with the TSB of the Midlands whether, in the interests of depositors, of both
banks, they should amalgamate to form one unit, which would cover the industrial heart of the country, with a population of over three
million, and which, without question, would have a significant growth potential when the new services come into operation."
measure of how quickly the new Bank was able to introduce new products and services is the following comprehensive list that was attached
to its Annual Report for 1981.