HAPPY NEW YEAR

For historical reasons our financial year begins on 1st September, which makes us unique amongst UK building societies where most favour a match with calendar year-end in December or tax year- end in March. However, we quite enjoy being different, especially as this will give is the chance to display how well we have hurdled over the various barriers that 2009 has presented us with. This week we'll spend many hours crunching the final figures for our year just gone but we already know that we have much to be proud of in generating a strong surplus (profit) and continuing to cut our costs. We've completed less mortgages than in previous years but that wont surprise anyone, given the fragility of the housing market and our reputation for avoiding risky lending.We've also lost some retail balances to the part-nationalised banks, which is a bit galling as they've been able to use taxpayers subsidies to artifically inflate their interest rates on some accounts. But our strong local membership remains intact and our tremendous confidence in a bright future for The Hanley is undiminished. In fact our annual report and accounts for year ending 31/08/09 will confirm that we are a strong, local building society in fine fettle, well-prepared for the inevitable challenges of the coming year and beyond. A very happy new year to all Hanley members and to all our future customers.

"TRANQUILITY BASE,THE EAGLE HAS LANDED"

I was 10 years old when Buzz Aldrin announced that Apollo 11 had landed on the moon surface and Neil Armstrong took those small steps and giant leaps. I remember the fuzzy TV images and the sense of wonderment that men were exploring another planet. Forty years later we can reflect on perhaps the most theatrical example of mans scientific progress and also the most amazing testimony to the fulfillment of a politicians pledge. President John F Kennedy had promised in 1961 that America would reach the moon and return it's astronauts safely to earth. In our current era where pledges and manifestos are less like tablets of stone, more like pillars of chalk,it is hard to know where JFK got his sheer ambition and bare faced cheek! Maybe part of the answer is that he was a true leader, a statesmen and a man with purpose to match his vision. It's hard to see where our generation of leaders will plant their flag. In 40 years it would be a revelation to think that 2009 was the junction point where bold intentions on climate change, 3rd world poverty or cures for cancer were implemented and not just talked about.

A LANDMARK DAY

This really is a landmark day for The Hanley Economic Building Society. Today we are moving to our brand new, tailor-made head office at the other side of Festival Park. It's not a long distance to travel ( we can even keep the same postcode) but it signifies our optimism and ambition for our future as a thriving local, independent mutual. It is invigourating to demonstrate our belief in this great business at a time when so many others in our marketplace are having to retract and to limit their future-planning. The new building is a contemporary,open-plan design with an emphasis on spatial and energy efficiency, and ease of access for customers and staff. We have been in our current building since 1992 and the market environment for all building societies has changed markedly in the years since then but my sense is that the next few years will see an equally radical change in the financial services landscape.However The Hanley is very well placed to seize the opportunities that change inevitably brings, and we will relish the chance to continue demonstrating our strength as a business with local roots and a modern verve.
But just for today our main task is transporting boxes and setting up our new home.

CAPITAL CHANGE

The recent events at West Bromwich Building Society led to a collective sigh of relief in our sector. For some weeks there has been speculation that the West Brom could go the way of the Dunfermline Building Society and some of the media seemed to extract glee from the difficulties faced by another mutual. Thankfully West Brom has confounded these cynics by gaining access to a new form of capital which will allow the society to swap some subordinated debt for a new instrument called Profit Participating Deferred Shares. (PPDS). This means that the West Brom ( and presumably other societies) can benefit from the flexibility and percieved higher quality of tier 1 capital through PPDS rather than rely on the more rigid and less favoured (as the name suggests) subordinated debt which typically exists in the form of long term loans with a fixed interest rate payable.
However the new PPDS leaves the West Brom (and the building society sector) with a new conundrum. Mutuals don't have to maximise profits for shareholder yield.But holders of PPDS may well seek maximum returns.How will societies with PPDS balance the needs of mutual members ( savers and borrowers) with the potentially divergent needs of PPDS holders? Watch this space!

"If you think change is tough........"

The sheer scale of the changes announced yesterday by the Lloyds Banking Group take your breath away. The closure of all 164 Cheltenham & Gloucster (C&G) branches with the loss of 1,660 jobs is acute enough but news that Intelligent Finance will move out of the market for new mortgage business and Bank of Scotland will exit the intermediary mortgage market simply intensifies the sense that these once great "brands" are now collateral damage in the rationalisation of the group. When I first joined the building society sector 20 years ago C&G was my fiercest local competitor.They had slick systems and a fine reputation as a progressive building society but now like others who converted to PLC ( eg. Alliance&Leicester, Bradford &Bingley, Halifax, Northern Rock) their logos will soon become the stuff of nostalgia. But for me our financial services landscape in the UK is much poorer for the absence of such locally-established players.The local flavour offered by our thriving building society sector in 2009 remains something to be of which we should be very proud and protective. But clearly we need to adapt and to get even closer to what our members need by getting even better at the stuff we do well. As someone once said, "if you think change is tough,wait till you try irrelevance".......

This week my wife treated me to a fantastic birthday gift of a trip to see Eric Clapton at the Royal Albert Hall. The venue was spectacular and the gig was really superb. We also took time during the afternoon to visit the Victoria & Albert museum which is a favourite place to view the glittering heritage of wonderful art that we have in this country. During our trip around the British art segment we were both taken aback by the volume of magnificent works which were manufactured right here in Stoke on Trent. Majestic pieces from Minton, Wedgwood, Spode and others grace the halls of the V&A and remind us of just what a powerhouse city Stoke on Trent once was and how pivotal it's businesses were in the late 18th and 19th century.
Inevitably this made me think about how the city has coped with the pace of change and how leadership over many decades has allowed the contemporary world to overtake the local, traditionally strong industries.Of course change is inevitable and nowhere is immune.But change can be managed, and opportunities seized. In relation to The Hanley, we strive to combine the verve of a modern, customer-focused business with the traditions and roots of a locally-based building society. The pace and depth of change in our sector remains challenging and frenetic at times but we are extremely optimistic that this local building society is not a museum-piece,but rather is a vibrant contributor to a diverse financial services sector where we like to glance back occasionally but where we much prefer to look forward and seek ways to make our own mark.

TRUST US

Party politics interests me about as much as crocheting or skydiving, but it's just impossible to ignore the spectacle of our elected MPs scuttling to repay those expenses that are now deemed excessive. Frankly if they think this will recapture public trust I think we need to tell them that horse bolted long ago. Trust is hard-earned but fragile. Financial services firms ache to be trusted by their customers and the credit crunch has undoubtedly damaged that trust. But putting things right after you've made a blunder is only one part of rebuilding trust. I think people generally want to see real contrition and a genuine will to do better in the future.Politicians proclaiming that they "didn't break any rules" are missing the point;it's not legality that is the issue ,it's greed.
Building societies have a long history of earning the trust of their members and we work really hard to preserve that trust. We don't seek the moral high ground nor do we get it right all the time but I believe that Hanley members can expect us to be trustworthy, transparent and fair and can call us to account if we slip up.