NORTH/SOUTH DIVIDE

The question I'm most often asked when people realise I work for a building society is; what do you think will happen to house prices? I've now become adept at  dodging the desired soundbite response by reminding my inquisitor that forecasting is very difficult, especially if it's the future you seek to forecast ! I have also tried to nuance my response with a reminder of how territorial the UK housing market is, and how London and the south east is practically another eco-system compared to our local housing market here in north Staffordshire. Recent Land Registry figures actually show that the north/south divide is widening; London house prices are up 7% over the 12 months to the end of  October while prices in the north east fell by 5.8%. In fact if you scope into prices in the London Borough of Kensington & Chelsea you will see average price rises of an eye-watering  15.9% in that period. Mortgage lending for house purchases in London is also disproportionately high, up 22% against an  average of +13% nationally, according to the Council of Mortgage Lenders' most recent figures. So the disparity in house prices in favour of  London is unlikely to fade anytime soon and  the north/south divide is a hallmark of the UK market. Which is one reason (but not the only reason) why local building societies like The Hanley have such a key part to play in making mortgage funds available to local housing markets, to such an extent that some of our products are specifically designed for the locality in which we were founded, and upon which our business success is so rooted.  Small, local mutuals like The Hanley can serve local customers with mortgage deals that are not available on a national scale.This is most notable in the first-time buyer market, where frankly we feel a responsibility to assist local people to get on that first rung of the homebuying ladder. So a modest 5% deposit can still be enough to obtain a Hanley mortgage for first time buyers in our heartland, despite what the national media may declare.So sometimes a fragmented, territorial market can have it's benefits, even if it makes that soundbite answer to the house-prices question much tougher to compose.      

BUILD IT AWARD

At The Hanley we have been active in the self-build lending market for a few years now and we have carved an impressive  niche by offering a bespoke service and a distinctive mortgage product to prospective borrowers keen to build their dream home. Last Thursday we attended the inaugural Build It award ceremony in Swindon and were announced at the lunch as Best Self Build Lender. We were thrilled to win such a prestigious accolade especially as the competition included other building societies with formidable reputations for innovation around the "green" agenda. The self build segment of the new housing market is blossoming and it is refreshing for us to be associated with such vibrancy.We do so in partnership with Buildstore the leading experts in this field (pardon pun) as this enables us to lend with our customary prudence and in full understanding of the project the customer has in mind. ( see www.buildstore.co.uk)  The Grand Designs image of self-build is a bit misleading as most people don't actually project manage themselves nor do they don wellies and wield a spirit-level. Most are content to employ experts throughout the process and are simply attracted by being able to influence the design and construction methods. One feature of our self-build lending is that it is widely spread across the country but I'm really hopeful we will soon be announcing that  The Hanley will be helping some local Stoke self-builders to fund their ambitions on some local plots. In many ways this is a contemporary version of what building society founders were doing 158 years ago, in helping local people to afford to build their own homes.

FUNDING FOR LENDING

It was pleasing to see several building societies listed in yesterday's announcement of the early adopters in the Bank of England's Funding for Lending scheme. The FLS is designed to boost lending to small businesses and to UK households by providing lenders with a funding source below the current  level of retail savings rates.With mutuals such as Ipswich, Principality and of course Nationwide on board the range of organisational scale across our sector is better represented than may have been expected and I know a number of smaller societies,including The Hanley, are considering future involvement. Hopefully the FLS will revitalise SME and micro-business funding as I know, from speaking to many business contacts locally,there is a pressing need for this segment of our economy to get a jump-start on new initiatives. Similarly it will be important for FLS to assist potential new mortgage borrowers with modest deposits.It would be a pity if the FLS simply became the catalyst for a remortgage price-war on sub 60% LTV lending. Of course no government intervention in the lending market is  guaranteed to combat the prevailing frailty of consumer confidence . Consumers  are understandably concerned about the gloomy clouds over the eurozone and about the future impact of austerity measures here in the UK. Seems to me that is why all of us in financial services should welcome all sincere efforts to boost new business levels , whether it is FLS or indeed the current Mail on Sunday campaign to allow the full ISA allowance to be placed in a cash ISA. It's easy to find fault with virtually any attempt to get that jump-start but consumer confidence will only jolt forward when we are crunching through the gears .        

GOLD MEDAL GREATNESS

22 Gold medals and still 4 days of competition to go, the Team GB performance has been electrifying. Personal favourites for me have been Sir Chris Hoy, Andy Murray and  Mo Farrah but the connectivity of the team and the dedicated focus of our athletes has been revelatory. But the jaw-droppingly, dazzling moments were provided by the American swimmer Michael Phelps, the most decorated Olympian of all time, not just for his gold-medal haul but for his grace and sheer class when he took silver behind Ryan Lochte in the 200m. Phelps and so many other gold medallists have reminded us what it takes to be an elite athlete, not just in terms of talent and dedication but also in the mental strength to deliver when it really matters. I knew I'd enjoy all this sport on TV. I said so on the morning of the Opening Ceremony when I was asked on BBC Radio Stoke's Friday review of the current news. I also said that the £9billion bill makes me twitchy at a time when austerity and cutbacks have taken their toll on grass-roots sport, and at a time when the economic recovery isn't expected anytime soon. I still feel that way. The Olympic party has been sensational but the hangover could be brutal. I hope the legacy of sporting success is a potent one and I hope many youngsters want to emulate their Olympic heroes, but  the regenerative impact of the games on cities outside London  is unproven and there is still so much to be done on infrastructure and skills in other segments of our economy.Sport may be able to lead the way on regeneration, but it may be just the sunniest bit of an otherwise deary summer. Certainly todays forecast by the Bank of England of zero economic growth in 2012 contrasted with the ebullience of the Olympics news, and jarred with the "can-do" mentality that we have found so attractive in Team GB.    

MEDIA MONDAY

Yesterday was a unique experience for me. I left home at 4am to get to Media City in Salford to appear on Radio5 Live's excellent show, Wake up to Money at 5.45am. An hour or so later and after a swift trip to a very genial make-up lady I made my national TV debut on BBC Breakfast. The topic under discussion was the behaviour of Claims Management Companies and the blizzard of bogus PPI claims that building societies are currently having to contend with, despite our recent complaint to the Minstry of Justice about the volume of "no sale" claims.  My trio of media moments was completed by an interview with Radio Scotland on the same topic, although I was very tempted to join in the discussion about Andy Murray's amazing efforts at Wimbledon the previous day. Reflecting on a very special start to my working week I have to admit the experience was a bit nervewracking but hugely enjoyable. I also found myself looking across the Salford Quays from the 2nd floor of the BBC building in admiration of the scale of regeneration that has been achieved there, and wondering why such an ambitious City-scape didn't happen in Stoke a few years ago when the will and the available capital seemed to be at a peak.    

Fixing LIBOR

Yesterday Barclays Bank was fined £290 million for distorting the basic financial data used to set interest rates around the world.The LIBOR ( London Inter Bank Offered Rate) is used to set the value of many thousands of financial transactions across global markets every day. It is the rate at which banks borrow from each other and strict market rules insist that these rates must be reported accurately and honestly by a group of 15 of the worlds biggest banks. Traders at Barclays systematically distorted LIBOR for their own benefit and to mask the true financial position at the bank. The average UK saver or borrower could be forgiven for wondering if this world of nauseating  email exchanges with promises of Bollinger for favours done,really has anything at all to do with them.But of course it does. Rigging the LIBOR is like manipulating the price of money,  and in the real world that impacts small business loans, mortgages, credit cards and virtually anything else with an interest rate attached. At a time of economic austerity the reputational damage to Barclays is immense. No amount of celebrity-endorsed TV advertising will easily remove this particular stain. Surely this is the nadir for the banking sector? Or maybe not. It's clear that other banks are involved and Barclays is just first under the spotlight.  But surely it is also clear that the values and the true culture of a business is reflected in how staff behave towards their customers and in that regard the large PLC banks have nothing at all to teach mutual building societies. Of course we don't get everything right all the time, but the trust of our customers is at the core of the mutual ethos and that defines our clear distinctiveness at a time when many customers must doubt there is anyone they can trust or rely upon. Building societies have a proud heritage and we also have a contemporary commitment to conducting our business in a way which is transparent and fair. If any Barclays customers choose to walk away in disgust, then I can assure them of a warm welcome at The Hanley.                

LONG SERVICE WITH A SMILE

Today I'm hosting a lunch for 10 Hanley staff with a combined length of service of 304 years! The lunch is a thank you to our longest serving and loyal colleagues and was prompted by the amazing realisation that 3 of our people will celebrate 40 years service this year.Clearly 1972 was a fine year for recruitment at The Hanley. This is quite a feat in any contemporary business but for a firm with only 60 employees it's even more remarkable.Others joining us for lunch today have 10 or 25 year anniversaries with The Hanley to celebrate in 2012. It would be temptingly easy to caricature long-service as indicative of a reluctance to change and just settling for things as they are. But that really isn't the case with these Hanley colleagues. During my time here I've admired the way  very experienced colleagues challenge themselves to contend with the unprecedented changes in our core markets and it is undoubtedly true that the society has benefited from the blend of youth and experience that we have in our business. But there is no sense of anyone having the same year 10 or 25 or 40 times . On the contrary the appetite for personal development amongst our experienced staff is a motivator for new recruits. Perhaps that's part of the success recipe in any business; providing an environment where all employees feel able to demonstrate  zest and creativity, irrespective of how long they've been part of the team .  

BSA CHAIR (AGAIN)

At this weeks Building Societies Association (BSA) Annual Conference I was elected BSA Chairman by my Chief Executive peers in our sector. As I previously held this post in 2010/11 I've interpreted my re-election as a show of faith rather than a request to clear up the mess I left behind last time! Actually I'm thrilled and feel very privileged to represent the mutual sector in this way, particularly at such a time of regulatory upheaval and market disorientation. Our agenda looks pretty crammed for the next 12 months and of course the housing market remains subdued as a result of macro-economic constraints, notably in relation to funding and the uncertainty in the eurozone.


The BSA has a talented team in it's London secretariat and they do a superb job for building societies across the country in interpreting legislative and regulatory changes and in reinforcing the message that the UK financial services marketplace needs the mutual sector . We provide a clear alternative to the PLC banks and genuine diversity in the core markets of savings and mortgages and of course our member ownership model helps us get closer to our customer base. Over the next 12 months I hope to assist the BSA in sharpening the case for mutuals by making mutuality meaningful in a contemporary sense.

EMERGING LEADERS

This years BSA Conference in Manchester includes an innovative segment designed specifically for the future leaders across the mutual sector. The session is tailored for those individuals in our business that we regard as increasingly influential and integral to our future success. Typically these are "middle managers" (what a hackneyed phrase that is) with an appetite for development on such topics as strategy, leadership, risk-evaluation and the key challenges to our sector in the future. The Conference segment will be externally facilitated by the ebullient Terry Russell and I'm sure attendess will gain a great deal from the experience and also from the networking opportunities of just being around the Conference. Aside from acknowledging that growing our own leadership talent is vital for the mutual sector, the session will have the side effect of portraying a contemporary image to the media , which has in the past caricatured the building society annual conference as lacking any diversity and being populated by middle aged men in grey suits.! There will still be a few of us around of course but the conference is about a lot more than that, as proven by a swift glance at the calibre of guest speakers. The Emerging Leaders concept is a familiar one at The Hanley as we have our own internal development programme for key influencers across the society and we have 4 of our rising stars participating / competing on our programme. They'll be joining me at this years conference and I hope it can springboard them to more success as individuals and as a Hanley team in 2012.

IMPORTANT GUESTS

Yesterday I was pleased to wecome to Stoke the Director General of the Council of Mortgage Lenders (CML), Paul Smee. CML is an influential trade body which speaks on behalf of UK lenders and clearly there is currently plenty to talk about. Paul and I discussed the implications of the FSAs mortgage market review, the importance of local mutuals in providing diversity in the marketplace, the plight of first-time buyers and the regenerative potential of housing initiatives. As Paul is a Crystal Palace fan we didn't dwell on football too long! Hopefully our meeting compelled Paul to believe that local mutuals such as The Hanley continue to punch above our weight in delivering great service to our members and that we remain a potent force in our local communities. Today I am hosting a visit from senior executives at the Scottish Building Society, a similarly sized society to ourselves but with a far more extensive territory and a huge agency network. The purpose of the visit is to learn from each other and to compare priorities and performance in our respective businesses. One of the enduring strengths of the mutual sector is that willingness to communiacte with and learn from others and I really hope that our visitors from SBS feel rewarded having made such a long trip south.In contrast the other important visitors to Stoke today are Valencia FC and I hope they have no such warm feeling after tonights Europa League match with Stoke City FC. I am taking a couple of guests to this historic game and I hope that the Potters can rise to this very special occasion.

FORUM FEEDBACK

We held our first Customer Forum of 2012 on Saturday morning with 20 of our members quizzing me on a range of topics. I really enjoy these sessions and am constantly surpised by the depth of feeling amongst local people on key issues in our marketplace.We have been holding these Forums for several years now and of course the low interest rate environment for savers is a recurring theme, but other matters came to the foreground on Saturday, notably the impact on the mutual sector of potential contagion from the eurozone and the need to persist in our efforts to assist local first-time buyers. Obviously hosting a Form every few months helps me to understand how The Hanley is viewed by members , meeting them personally and with no formal agenda, but it also influences my thinking on member appreciation of the risks we face in our business.If ever complacency were to creep in ( and I'm never normally accused of that !) then a brisk Customer Forum session is sure to refresh and revitalise. The highlight of Saturdays Customer Forum was talking proudly of our recruitment in January of two new apprentices, Jordan (16) and Lauren (17). Aside from making us all feel very old, these new recruits epitomise our optimism for the future and our commitment to developing our own talent to meet the many challenges we face in the future.