DIVERSITY IS A VIRTUE

The heads of several media groups,including ITV and BBC, have written to Business Secretary Vince Cable urging him to block any attempt by Rupert Murdoch's NewsCorp to take full control of BSkyB on the grounds that such a move "could reduce diversity" in the marketplace. Whatever the merits of their specific case (and I have to admit to being a reader of The Times and avid watcher of SkySports) the importance of a diverse market with genuine consumer choice is compelling.Diversity in business is a contemporary topic and I am struck by the potency of the argument for diversity in our own marketplace .A recent research report by the Oxford Centre for Mutual and Employee-Owned Business makes that case very powerfully, reminding us that a more diverse financial services sector promotes systemic stability and offers benefits to individual customers by increasing competition and choice. The report emphasises that mutuals bring a market dimension based on service and member-engagement with low risk-appetite and high customer endorsement.Such characteristics are worthy of support from decision makers and regulators if only to put competitive pressure on the banks where the current market share of the biggest 6 banks in gross residential lending is excessive . In a thought provoking report the author Jonathan Michie also finds time to advocate a Minister for Mutuals. Now that would go a long way to convince many that the coalition government's promise to " foster diversity in financial services" is a genuine one.

INSPIRATION & PERSPIRATION

Last night we held our annual staff meeting to platform our corporate plan, business targets and ambitions for the coming financial year (which begun on 1st Sept) . It gave me the chance to set out our expectations for the year ahead and to join my team in outlining how we intend to propel The Hanley forward so that we can continue to strive to be "Britains Best Local Building Society".
The theme of the evening was Exponential Change.
We spoke about the challenges in our core markets of savings and mortgages, and about the localised challenges of our city where regeneration progress is likely to be hampered by budget-cuts in the public sector.We also discussed our plans for the new branch in Biddulph and the importance of being distinctive in our distribution and our marketing. I found it really inspiring.....and thankfully I wasn't alone in feeling that way.....as it is so motivational to work alongside people who are sharply focused on being successful and determined to deliver the best we can for our members.
Alongside the inspiration there was perspiration too as I hosted our quiz night, which covered TV & movies (no surpise there) and a lengthy musical round where contestants had to identify the intros to well known pop and rock songs. Sadly for some of our directors and senior managers the tunes proved to be not that "well known" and the winning team was populated with 20 and 30 somethings .
A reminder also that the potent blend of competitive spirit and teamwork is a winning formula.

FORECASTING

Since returning from my family holiday I've been taking a fresh look at our business plans, goals and targets for the coming financial year, which for the Hanley starts on 1st September.( a bit quirky I know but the date is a legacy of our long history and we are wary of changing to a more conventional financial year)
At the core of our thinking on 2010/2011 are a series of assumptions on how markets will perform in the months ahead, what the interest rate and inflation numbers will look like and how we can carve our niche amidst the ever-changing trading conditions. In such circumstances it would be a delight to be able to rely on economic forecasts but my recent reviews of even the most eloquent of "experts" reminds me of the quote attributed to JK Galbraith that " the only function of economic forecasting is to make astrology look respectable".
Even the Monetary Policy Committee has taken some stick in the media for its failure to get much right when predicting the future , but most of us are not hoodwinked into thinking that anyone really knows with assured certainty what will really happen in the UK economy. Best-guessing is about as much as we can expect .That's why it is vital for a business like ours to evaluate, monitor and control risks and not indulge in new ventures which depend on a rose-tinted view of the future. It is also why it is essential for us to keep working on what we are already good at, refine what we do and stay flexible. At least I can forecast that we will enter our new financial year full of optimism in our ability to do precisely that.

SPANISH CAJAS

Normally when a member of staff at The Hanley stops me at the coffee machine to chat about Spain,the conversation focuses on their holidays to the Spanish coast or my annual golf trip to Marbella, but this morning I was quizzed about the plight of the Spanis Cajas. These small local banks are tipped by some market commentators to struggle to pass the current round of "stress-tests" being undertaken for banks across Europe and my colleague wanted to know whether there were any crossover similarities with small UK building societies. Of course some common ground does exist in that cajas and local building societies, like The Hanley, are locally based and are not quoted companies but that's really where the similarity ends.
Cajas are not mutual, customers are not members,and do not own the business. Cajas are heavily influenced by local political control and their lending is heavily influenced by that control.
Cajas are also exposed to the new-build development market in Spain where planning rules and the funding crisis left many sites empty and worth far less than was lent on them at the market peak.
It will be interesting to see the results of the stress-tests on the banks across Europe and indeed to look at the perceived strengths and vulnerabilities of all banks not just the cajas in Spain. But mutuality and resilience remain distinctive features of the UK building society model and if the past 2 years have taught us anything at all it must surely be that large organisational scale is no guarantee of success.

CHAIRMANS LUNCH

Yesterday I had the pleasure of hosting a lunch for the Chairmen of 10 different societies. One of the benefits of being Chairman of the BSA this year is that I get to meet the leadership of other building societies and hear about the successes and challenges that are occupying boardroom time.I am always struck by the energy and insight that exists across the sector and by the optimism that is expressed about the relevance and importance of mutuality in a diversified marketplace. The chairmen are always keen to know more about what the BSA is doing and how we can demonstrate resilience across the sector, despite the clear fractures in our core markets of savings and mortgages. Yesterday I was particularly struck by the appetite for change amongst the group of chairmen;there was no sense of yearning for a "golden era" of the past but rather a desire to get on and thrive in a new world, whatever that world may look like. I don't know if my words to them were at all motivational, but as a group they certainly motivated me!

THE SOFTER STUFF

This week I spent 2 days in Bournemouth with the Chief Execs of 5 other building societies and 14 of our staff on the final session of our Achievers Academy, which was set up to help develop our own business leaders of the future. Over the past 12 months this group has undertaken a range of tasks and heard from various guest speakers on topics which can be broadly grouped under a leadership-development heading. It's been hugely enjoyable spending time with ambitious and dedicated people, so keen to learn more about how our mutual businesses can continue to thrive .The logic behind the Achievers Academy is that small, local building societies are distinguished by the quality of our people and the service they deliver.
Tomorrow I have the privilege of presenting the prizes to the winning runners in the Potters Arf Marathon which the Hanley is sponsoring this year, for the 3rd consecutive year. Some of our staff will be amongst the 1500 runners and several more will be around the course encouraging all the participants. The logic behind this sponsorship is that we want to demonstrate our commitment to our local community and be associated with such a successful, local event.
I guess, at a time when liquidity, capital , regulation, funding and low mortgage demand are the dominant features of everyday business life, these 2 events could be viewed as softer priorities . But they're really important to the Hanley and to our determination to carve a distinctive niche in an overcrowded financial services marketplace. They're also great fun.

INTEREST RATES ON SAVINGS ACCOUNTS

Following my last blog a member reminded me that " a smiling face still needs to be backed up by competitive rates" and pointed to our ISA rates as being currently adrift of the keenest on the market. I'm always grateful for feedback, even when its not entirely complimentary, and of course this topic is invariably a hot one whenever I speak to members at our Forums or in our branches. The truth is that we are in uncharted waters with a bank base rate of 0.5% and a lending market which is at best lukewarm. This means savings rates are under pressure across all banks and building societies. Of course at any given time a firm can offer a market-leading deal as a hook to attract new savers, sometimes with gimmicky "bonuses" or simply because they need to bring in funds virtually at any cost to remodel their balance sheet. But the Hanley in common with many other building societies chooses to strive for competitive interest rates over the longer term and to retain a true balance in our business so that the society is not jeopardised by paying interest rates that are unsustainable. We keep our savings rates under constant review and we will always strive to deliver the very best we can for our members. We aim to be around for many years to come, unlike some banks which offered eye-catching rates in the recent past and who have since folded.