Chesterfield Royal selects Lloyds TSB in banking services tender

The tender asked banks to bid using the current volumes of transactions.

Yorkshire Bank declined the offer to tender on the grounds that it did not feel it they could meet the requirements of the hospital both from a pricing and servicing point of view. Lloyds TSB, Barclays, Natwest and HSBC all responded.

In line with trust policy, the tenders were subjected to evaluation and ranking using both cost
and quality measures. The criteria used, and their weightings, were as follows: -
1) Net cost to Trust (70 per cent weighting)
2) Electronic banking, information and security systems (20 per cent weighting) and
3) Support team access (10 per cent weighting).

The Lloyds Bank tender response included the statement that they would continue to waive the majority of banking fees, other than the variable transaction costs shown above, as they valued the relationship they hold with the trust.

Although Lloyds offered the best quote, further clarification was sought due to the exceptionally low value of the tender (the trust currently pays a £3,250 annual fixed charge).

Their reply stated that £770 was the correct charge as there would be no fixed charge for a three year contract, and that they would continue to provide the other money transaction business on a free basis to the trust.

The Barclays tender submission included access to their “MT Advantage” deposit account which offers an advantageous interest rate on cash deposited by customers who place their money transaction business with them.

The current interest rate differential between this account and other accounts available to the trust gives rise to the possibility that the higher banking charges levied by Barclays may be offset by higher levels of interest received by the trust.

However this current differential is not guaranteed. The rate offered by Barclays is under constant review and the differential may be squeezed in the new financial year as the trust will then be in a position to offer longer term deposits, at more favourable rates, to other banks.

Due to the uncertainty inherent with future rates the trust believed the significantly lower up front banking charges offered by Lloyds Bank offers the best value option for the organisation.

The Audit Committee held on 19 January 2011 agreed to ecommend the appointment of Lloyds Bank for three years from 1 April 2011.