Events
Text of a speech by David Webster, Incoming BSA Chairman, to the BSA Annual Conference, 5 May 2010
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Date:
6 May 2010
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Introduction
Ladies and Gentlemen, may I warmly welcome all of you to tonight’s dinner, generously sponsored by Bank Machine. In a few minutes Ron Delnevo, Chief Executive of Bank Machine, will be talking to you, but before Ron joins us there are a few points that I would like to make at the very beginning of my chairmanship.
First of all, and very importantly, I would like to pay tribute to the leadership, drive, chairmanship skills and sheer tenacity shown by Graham Beale in his year as Chairman, a year that has been characterised by very considerable success within the BSA. For example, Graham’s leadership has resulted in what, in my view, has been a very welcome resolution of some of the problems faced by the BSA Pension Scheme. In addition, the new BSA mortgage service has also become a well established external commentator and internal supplier of information to BSA members during Graham’s year, meeting the very high standards we already associate with the BSA’s existing services. Finally, of course, we also changed the rules of the BSA a year ago to enable us to welcome into membership the merged Britannia/Co-operative Financial Services Group. Graham, I know, felt that it was very important to embrace the new cross mutual agenda of which that merger formed an important part. I am delighted that the Britannia/Co-operative Financial Services are not only in membership, but play an important role in our trade body.
Graham, of course, is chief executive of the world’s largest building society. I know the BSA Secretariat is sometimes quizzed whether Nationwide is a dominant or even over-dominant member of the Association. Under Graham’s leadership that has absolutely not been the case. As a small society Chief Executive I can categorically confirm that Graham welcomed the views of every Council member whether they be from small, medium or large societies and he was very happy to take on the views of non-Council members, irrespective of the size of their organisation.
My own building society, the Hanley Economic, is most definitely not the world’s largest building society, although we do have ambitions to be amongst the best! We are a much smaller society, and in many ways a typical, locally-rooted society, but if I make one commitment to the members here today it is that I absolutely intend to follow Graham’s example, and seek to represent the entire membership.
It would be fair to say that I have a more natural understanding and an empathy with the issues faced by small societies but it is not my intention, as Chairman of the Association, to advance an exclusively-small society agenda. Rather, I am interested in putting forward the very compelling case for all mutual lenders and deposit takers, irrespective of their size. There are a series of very positive characteristics that we all share. My role as your Chairman is to ensure that we emphasise these together, pull in the same direction and agree as far as possible on the key points we want to make in relation to the challenges that we face.
Just a brief mention of those challenges – Graham has covered these very effectively in his speech this morning. We know that the savings and mortgage markets are much smaller than they were in the middle years of the past decade. We are only slowly emerging from the recession. There are a range of important market and regulatory challenges which we still face. Having said this, however, we should avoid getting too depressed. Every single building society in this room has negotiated the recession better than our former colleagues that chose to demutualise. As is well known, no former building society that demutualised continues to exist as an independent institution. Some have failed and stumble on, only because of taxpayer support, unable to stand on their own two feet.
Building societies enjoy a special relationship with their members that the banks are utterly unable to replicate. Some commentators have asserted that building societies, such as the Hanley Economic are sub-optimal in their size, that they need economies of scale, that they cannot survive in today’s competitive markets. There are of course some excellent examples of very successful large institutions. Nationwide obviously comes into that category. However, it would be difficult to describe Royal Bank of Scotland or Halifax as successful institutions after the events of the last two years, whereas I would certainly describe my own organisation and a whole range of other building societies as successful. Unlike the demutualised institutions, we are still here, we are well capitalised, we have lots of liquidity, our mortgage arrears are low, and our service standards outshine those of the banks. I’d like to quote to you a few words from a speech made by Andrew Haldane, the Executive Director for Financial Stability at the Bank of England who was speaking at the Association of Corporate Treasurers in Leeds in September last year. He said –
"Mutuality may do a better job of aligning stakeholder incentives than some alternative forms of corporate governance. It is a depressing but telling fact that, of the demutualised former UK building societies, none is today in independent ownership. Thrift, mutuality and relationship building have long underpinned banking (in Yorkshire). These principles went missing in the run-up to the present crisis. The costs of that
vanishing act are now all too apparent. In rebuilding the financial system, to create one which is both stable and better able to meet the needs of the real economy, these principles need to be rediscovered. They offer a tried and tested - indeed, trusted – roadmap for the period ahead."
These words resonate in our boardroom and I’m sure in your boardrooms too. We believe that our business model is tried, tested and trusted and of course this applies to a large number of our building society and mutual colleagues, irrespective of their size. In the light of the collapse of the conventional banking institutions we believe they are of especial relevance in today’s market, and if the past two years have taught us anything at all it must surely be that organisational scale is no guarantee of success.
Ladies and gentlemen, as I approach the end of these remarks let me emphasise that I intend to be accessible and visible as your Chairman. For those of you in BSA membership or associateship please don’t hesitate to contact me, either directly or through the BSA team, to discuss your views on the future of the sector, the work of the BSA or the contribution that I, individually, should be making in my role as Chairman. I want to represent our membership as a whole; and I need your views and your support if I am to do that successfully.
May I conclude ladies and gentlemen by simply emphasising that I feel privileged and very proud to be your BSA Chairman, and I’ll do my very best to live up to the high standards of the role and to promote all that’s great about our sector.
It is now my very pleasant duty to welcome to the stage Ron Delnevo, Managing Director of Bank Machine. Bank Machine works already with around half a dozen building societies, they are an associate of the BSA and, as I said earlier, we are very grateful to them for sponsoring tonight’s dinner. I know that Ron would like to tell you a little bit about Bank Machine but also, perhaps as importantly, our nominated charity for tonight’s event Help For Heroes. Ron over to you…….
