ALEX BRUMMER: Sad lives of lost mutuals as identity and reputation for probity has been eroded
Mutual ownership has become a minority activity in Britain, with so many of the building societies and bigger insurers opting into the quoted world.
It has not been a wholly happy transition for established life companies such as Standard Life with a heritage dating back 200 years.
Identity and reputation for probity has been eroded. Among the mortgage lenders the story has been even more disturbing with many disappearing beneath the waves in the financial crisis and some of those still around, including the Co-op Bank and TSB (owned by Catalan bank Sabadell), in uncertain ownership.
Times change: Mutual ownership has become a minority activity in Britain
The departing chief executive of Nationwide, Joe Garner, reminds us to remember the fate of the Halifax, once the biggest beast among building societies, which, as part of HBOS, nearly collapsed in 2008 when it was rescued by Lloyds Bank.
It is the appalling history of botched demutualisation that makes the proposed disposal of LV to private equity barons Bain Capital unattractive.
Nationwide is testimony as to how mutual ownership works for the benefit of members and society. It has been the building society member of last resort, mopping up injured rivals. Under current leadership it never lost touch with the fact savers need to be treated properly.
During his five-year stewardship of Nationwide, Garner cemented its place as the UK’s leading mutual, adding 2m new members, making £28billion of home loans and capturing 10 per cent of the current account market. The lender’s latest results show how a mutual can compete in a highly competitive marketplace by tripling pre-tax profits to £850m in the first six months of this year.
Members have benefited through improving savings rates, investment in tech and branches, and by the building of capital as a safety cushion. Garner’s rule has not been without blemish. There was criticism of his £2m pay and bonus, and £500-a-week expenses in 2019. Nevertheless, in the pandemic he was first of the mortgage chiefs to declare he wouldn’t be taking a bonus.
It is wrong that some LV members voted ‘Yes’ to both gerrymandering the voting rules and taking Bain Capital’s paltry £100 windfall without access to full facts.
Chairman Alan Cook and chief executive Mark Hartigan have buried the possibility of a merger with another mutual Royal London behind a wall of secrecy and obfuscation. One could not have expected any better from Cook whose CV includes a ghastly period as managing director of the Post Office.
LV’s 1.2m life and pension members deserve a better fate for their savings.
Republican former private equity boss Jay Powell is in the last-chance saloon as chairman of the US Federal Reserve.
President Joe Biden is set to unveil his decision on Powell’s reappointment to the most important job in world finance before the November 25 Thanksgiving holiday.
The case for dismissing Powell on monetary policy grounds is not compelling, given that he has placed post-pandemic jobs and growth above inflation in setting policy. The main negative has been disclosure of ethical lapses among some Fed system members who have been trading bonds.
What might tip the balance for the White House is the decision of Democrat senators, Sheldon Whitehouse and Jeff Merkley, to oppose a second term for the Fed boss over failure to respond to climate change with enough urgency. Biden’s weak position in the Senate doesn’t allow him much room.
The pendulum is swinging towards Powell’s Democrat rival for the post – former Barack Obama adviser Lael Brainard. She would be the second woman to head the Fed, following the distinguished Janet Yellen, who is now US Treasury Secretary.
Marks and Spencer shares are having a great run, strengthening the confidence of top duo Archie Norman and Steve Rowe.
Hard on the heels of its elevation as food provider to the 2,800 Costa coffee outlets in the UK, informed speculation suggests it may soon be ready to buy out the minority stake in its jointly-owned Ocado online grocery enterprise.
That would let Ocado chief Tim Steiner focus on rolling out proprietary tech overseas and M&S deepen its hold on the online delivery firm’s food supply chain.
Percy Pig is alive and well.