Local Banks and Credit Unions are this weeks key meeting which is on Tuesday with Sir Hector Sants, the advisor to the Church of England on credit Unions - whose help I am seeking as we try and take forward our local banking and expanded credit union plans for Tynedale.
Later in the week I have the Association of Air Ambulance awards meeting - where we attempt to identify and assess who the winners of these annual awards will be.
Also on Wednesday parliament will be debating the conflicts and unrest in the Ukraine, Middle East and beyond from around 12.40 onwards.
I have multiple constituents coming to Westminster this week for meetings and some on tours, and we are working the full week once again in Westminster as Friday is another Private Members Bill day.
Showing posts with label Local Banking. Show all posts
Showing posts with label Local Banking. Show all posts
Monday, 8 September 2014
Saturday, 10 May 2014
The Co-Op is in big trouble and needs to take the doctors medicine
The Myners Report into the Co-operative Group has been published this week
The situation is not good. Following the discovery of a £1.5 billion black hole in their finances, followed by the Paul Flowers ‘crystal Methodist’ scandal, the Co-op commissioned the former City Minister Paul Myners to look into the group’s problems and put together a restructuring plan to make it sustainable and properly governed. The Spectator has done a list of the 5 key things you need to know from the 180-page report:
1. The Co-op group is still ‘manifestly dysfunctional’
Lord Myners is not impressed with the current state of the Co-op Group and warns it needs to radically change ‘soon’ or face breaking up. The report suggests there are still ‘deplorable governance failures’ and that the board is ‘still stuck in denial over this near ruinous failure of governance’. The scale of the change required to reshape the group is significant and throughout the report, Myners hints he isn’t confident the group will accept the speed and scale of reshaping necessary.
2. A smaller board should be adopted
The report states that the current board of the Co-op group is ‘not competent’ to perform the duties expected of it and there is ‘limited shared purpose among group board directors’. Myners blamed the board directly for the group’s troubles:
‘It is one of the great national business calamities and it is being led by a board totally unable – because of a lack of experience – to hold them to account’.
To replace the current bottom-up structure — the Co-op has 48 area committees with ~10 members, who in turn elect seven regional boards with 15+ members — Myners proposes a board with six or seven independent directors, two executives as well as a separate National Membership Council, to body to handle the concerns of members.
3. There should be a greater focus on being profitable
The group presently appears to have polarising priorities. As one anonymous shareholder told Myners:
‘Some want a dividend, some want low prices, some want to do social good and some want free range chickens.’
Obviously, the Co-op is a cooperative, which is not necessarily designed to maximise profit. But the report argues that the future safety of organisation’s financial health ‘can only be restored through steady, step by step, rebuilding of the Group’s profitability and repayment of its excessive debt’.
4. There is no easy route to fixing the group
With 90,000 employees and 600 elected members, the group has a lot of stakeholders shouting their concerns, including many with distinct ideas about how the group should change. In his summary, Lord Myners warns:
‘There is no short cut to recovery from its present weakened state. It will require retrenchment and some painful choices. After 150 years of development, and an extended period of financial decline, the organisation has seen more than half of its net assets wiped out in the past five years’
5. Shareholders will decide whether to back the reforms on 17 May
For my part I wish the Co-Op well. I am huge fan. But it has been run terribly for some time. There is a massive place for Mutuals, Building Societies, Co-Operatives and Credit Unions as the banks head away from the High Street in particular. But the Co-op is not helping would be applicants or the publics trust by not taking the medicine.
The situation is not good. Following the discovery of a £1.5 billion black hole in their finances, followed by the Paul Flowers ‘crystal Methodist’ scandal, the Co-op commissioned the former City Minister Paul Myners to look into the group’s problems and put together a restructuring plan to make it sustainable and properly governed. The Spectator has done a list of the 5 key things you need to know from the 180-page report:
1. The Co-op group is still ‘manifestly dysfunctional’
Lord Myners is not impressed with the current state of the Co-op Group and warns it needs to radically change ‘soon’ or face breaking up. The report suggests there are still ‘deplorable governance failures’ and that the board is ‘still stuck in denial over this near ruinous failure of governance’. The scale of the change required to reshape the group is significant and throughout the report, Myners hints he isn’t confident the group will accept the speed and scale of reshaping necessary.
2. A smaller board should be adopted
The report states that the current board of the Co-op group is ‘not competent’ to perform the duties expected of it and there is ‘limited shared purpose among group board directors’. Myners blamed the board directly for the group’s troubles:
‘It is one of the great national business calamities and it is being led by a board totally unable – because of a lack of experience – to hold them to account’.
To replace the current bottom-up structure — the Co-op has 48 area committees with ~10 members, who in turn elect seven regional boards with 15+ members — Myners proposes a board with six or seven independent directors, two executives as well as a separate National Membership Council, to body to handle the concerns of members.
3. There should be a greater focus on being profitable
The group presently appears to have polarising priorities. As one anonymous shareholder told Myners:
‘Some want a dividend, some want low prices, some want to do social good and some want free range chickens.’
Obviously, the Co-op is a cooperative, which is not necessarily designed to maximise profit. But the report argues that the future safety of organisation’s financial health ‘can only be restored through steady, step by step, rebuilding of the Group’s profitability and repayment of its excessive debt’.
4. There is no easy route to fixing the group
With 90,000 employees and 600 elected members, the group has a lot of stakeholders shouting their concerns, including many with distinct ideas about how the group should change. In his summary, Lord Myners warns:
‘There is no short cut to recovery from its present weakened state. It will require retrenchment and some painful choices. After 150 years of development, and an extended period of financial decline, the organisation has seen more than half of its net assets wiped out in the past five years’
5. Shareholders will decide whether to back the reforms on 17 May
For my part I wish the Co-Op well. I am huge fan. But it has been run terribly for some time. There is a massive place for Mutuals, Building Societies, Co-Operatives and Credit Unions as the banks head away from the High Street in particular. But the Co-op is not helping would be applicants or the publics trust by not taking the medicine.
Thursday, 10 April 2014
Really excited as more news of Atom - our new North East bank - take shape
It was only 9 months ago that we held our banking summit at the Baltic last year to try and persuade new entrants to set up new banks. So it is worth reflecting that the experts from the world of finance and banking, who came together on June 7 2013 at the Baltic in Gateshead to hear how regional banks could prevent banking continuing to be concentrated in the hands of a small number of players, have now followed the project through.
I organised that event to show how the North East can benefit from the changes.
Among those who came was former Gosforth Grammar School pupil Anthony Thomson, named as one of the City’s most influential operators after helping set up Metro Bank, a new customer friendly bank opening branches across London. Mr Thomson has now set up Atom.
Fuller story in todays Jounral:
http://www.thejournal.co.uk/business/business-news/first-direct-boss-metro-bank-6940681
I organised that event to show how the North East can benefit from the changes.
Among those who came was former Gosforth Grammar School pupil Anthony Thomson, named as one of the City’s most influential operators after helping set up Metro Bank, a new customer friendly bank opening branches across London. Mr Thomson has now set up Atom.
Fuller story in todays Jounral:
http://www.thejournal.co.uk/business/business-news/first-direct-boss-metro-bank-6940681
Wednesday, 9 April 2014
New Local Bank to be set up in the North East has my full support
Our local banking summits have been led by Newcastle man, Anthony Thomson, who I am pleased to say has announced that he is setting up a North East based bank:
Full story here: http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10754266/Metro-founder-to-set-up-Britains-first-phoneless-bank.html
It will be called Atom.
Atom will offer a "full range" of personal and business banking products when it opens for business in 2015. This will include current and savings accounts, as well as loan products and credit cards.
Mark Mullen, who has run First Direct since 2011, an online bank operated by HSBC, will become the new bank’s chief executive.
The bank will be based in the north east of England.
Full story here: http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/10754266/Metro-founder-to-set-up-Britains-first-phoneless-bank.html
It will be called Atom.
Atom will offer a "full range" of personal and business banking products when it opens for business in 2015. This will include current and savings accounts, as well as loan products and credit cards.
Mark Mullen, who has run First Direct since 2011, an online bank operated by HSBC, will become the new bank’s chief executive.
The bank will be based in the north east of England.
Saturday, 9 November 2013
My Church Times article on why the church should set up local community banks
"The Archbishop of Canterbury made good headlines, in July, when he stated that he wanted to use credit unions to compete Wonga out of business.
He was right when he championed the cause of credit unions, who do a great job up and down the country to help people through tough times. But the key question is this: does a credit union have the muscle to take on the pay day lenders? In their present form, they do not.
But a local community bank would.
It is the state’s responsibility to look after those who cannot look after themselves. This includes trying to protect the most vulnerable from financial exploitation. However, there remains a gap in today’s society that is being filled by Wonga and their payday cousins. What can churches and local communities do to protect and empower the most vulnerable in society? I believe that local banks are the answer, and the Church can do much to found, support, and drive them forward.
The Church has fought a long and determined battle to defend the poor from excessive interest rates. Indeed, The Archbishop’s comments promote a revitalised approach to the importance of the local economy envisaged in Deuteronomy 23:20:
‘You may charge a foreigner interest, but not a fellow Israelite, so that the Lord your God may bless you.’
In other words, a local perspective on the economy requires a more compassionate approach to lending and vice-versa.
We may not be able to completely abolish interest, as in Leviticus 25:37 or Exodus 22:25, but we can harness the central message by doing all we can to abolish predatory interest.
The Archbishop wants to compete the payday lenders out of the market from a Christian perspective. This is possible, but credit unions will not do the job. It is right that there are many different practical and relatively immediate measures currently being taken to address the problem of high-cost credit. We can restrict advertising, implement a greater degree of financial education, do more work on shared data, address interest rates and improve debt advice. But this is not enough to address the fundamental problem. People often need short term lending.
Local Banks have all the flexibility, the clout and the borrowing power of a bank, as well as all the sympathetic community approach of a credit union. The Church has done a commendable job in calling for banking reform: now it has the opportunity to lead it win local communities.
In June 2013 I held a conference in Gateshead with 170 delegates looking to set up local community organisations to address the lack of community lending. They wanted to facilitate this through local, trusted providers, rather than by faceless organisations, based in London, and run by computer models not people.
A local bank, with a local manager, will mean a return to relationship based banking - one which understands local people. The Archbishop calls for a "local and not London-based” financial system, and that this concentration in London is one of the ‘great dangers of the current mess’. He is right.
There are few things that greater symbolise our sense of compassionate community than the local congregation. As such, the church is better placed than almost anyone to lead a local banking revolution. The Church has for millennia preached an incredibly powerful message of thrift and charity. But isn’t the message of Scripture also one of empowerment?
For far too long the UK banking sector has been dominated by the six largest banks which have over 75% of the UK current account market. Two recently went bust. In Germany, 75% of bank lending is by the 400 local banks - called Sparkassen, which have all thrived in the recession because they are locally based. We need to be offering people a genuine choice away from the status quo, forcing banks to serve the people - rather than the other way round.
The kind of long-term community banking that the Archbishop mentioned has disappeared from our high streets and rural communities. That has had a detrimental effect on the ability to lend and to get credit. As a result local people turn to pay day and high cost lenders.
Local banks would invest back into local businesses and initiatives, restoring a sense of dynamism and entrepreneurship to rural areas. The rebirth of rural communities depends on us addressing this head on. How can we love our neighbour, whilst leaving them at the mercy of a distant and uncaring banking system or worse in the form of pay day lenders? I am keen to see a Holy Alliance of church, community groups and credit unions come together to address the problems that we all see. For me, the choice for the church is one of action or assistance after the event. The latter has been the traditional role. My argument is that the church is uniquely placed to offer credit services and compete the pay day lenders out of existence.
The Government has done their bit by radically changing the onerous regulation - we passed the Financial Services Act 2012, which allowed local organisations for the first time to set up and compete with traditional big 6 banking. The Government has cleared the way. If the Church feels that there is something wrong, something exploitative in the current system, they are now empowered to give body to that vision of a more compassionate, Christian economy.
Local authorities, churches and individual businessmen, with a philanthropic philosophy for their local community, are beginning to answer the call, giving everyone a stake in their own community. This is vital in restoring local pride.
To compete predatory credit providers out of the market the most effective way to live out this principle is for churches, which truly care for and understand the local community, to set up local banks. They represent a more comprehensive and accessible evolution from credit unions, empowering the church to protect the most vulnerable in society - who should only be indebted to the local community. This is not just rhetoric: I am holding a second conference on November 6 in Whitehall, bringing together businesses and local organisations with one clear purpose. We need local banks for our local communities. With God's good grace I have no doubt we can make it happen."
This is my Church Times article (although behind a pay wall): http://www.churchtimes.co.uk/articles/2013/1-november/comment/opinion/christians-should-step-in-to-found-local-banks
He was right when he championed the cause of credit unions, who do a great job up and down the country to help people through tough times. But the key question is this: does a credit union have the muscle to take on the pay day lenders? In their present form, they do not.
But a local community bank would.
It is the state’s responsibility to look after those who cannot look after themselves. This includes trying to protect the most vulnerable from financial exploitation. However, there remains a gap in today’s society that is being filled by Wonga and their payday cousins. What can churches and local communities do to protect and empower the most vulnerable in society? I believe that local banks are the answer, and the Church can do much to found, support, and drive them forward.
The Church has fought a long and determined battle to defend the poor from excessive interest rates. Indeed, The Archbishop’s comments promote a revitalised approach to the importance of the local economy envisaged in Deuteronomy 23:20:
‘You may charge a foreigner interest, but not a fellow Israelite, so that the Lord your God may bless you.’
In other words, a local perspective on the economy requires a more compassionate approach to lending and vice-versa.
We may not be able to completely abolish interest, as in Leviticus 25:37 or Exodus 22:25, but we can harness the central message by doing all we can to abolish predatory interest.
The Archbishop wants to compete the payday lenders out of the market from a Christian perspective. This is possible, but credit unions will not do the job. It is right that there are many different practical and relatively immediate measures currently being taken to address the problem of high-cost credit. We can restrict advertising, implement a greater degree of financial education, do more work on shared data, address interest rates and improve debt advice. But this is not enough to address the fundamental problem. People often need short term lending.
Local Banks have all the flexibility, the clout and the borrowing power of a bank, as well as all the sympathetic community approach of a credit union. The Church has done a commendable job in calling for banking reform: now it has the opportunity to lead it win local communities.
In June 2013 I held a conference in Gateshead with 170 delegates looking to set up local community organisations to address the lack of community lending. They wanted to facilitate this through local, trusted providers, rather than by faceless organisations, based in London, and run by computer models not people.
A local bank, with a local manager, will mean a return to relationship based banking - one which understands local people. The Archbishop calls for a "local and not London-based” financial system, and that this concentration in London is one of the ‘great dangers of the current mess’. He is right.
There are few things that greater symbolise our sense of compassionate community than the local congregation. As such, the church is better placed than almost anyone to lead a local banking revolution. The Church has for millennia preached an incredibly powerful message of thrift and charity. But isn’t the message of Scripture also one of empowerment?
For far too long the UK banking sector has been dominated by the six largest banks which have over 75% of the UK current account market. Two recently went bust. In Germany, 75% of bank lending is by the 400 local banks - called Sparkassen, which have all thrived in the recession because they are locally based. We need to be offering people a genuine choice away from the status quo, forcing banks to serve the people - rather than the other way round.
The kind of long-term community banking that the Archbishop mentioned has disappeared from our high streets and rural communities. That has had a detrimental effect on the ability to lend and to get credit. As a result local people turn to pay day and high cost lenders.
Local banks would invest back into local businesses and initiatives, restoring a sense of dynamism and entrepreneurship to rural areas. The rebirth of rural communities depends on us addressing this head on. How can we love our neighbour, whilst leaving them at the mercy of a distant and uncaring banking system or worse in the form of pay day lenders? I am keen to see a Holy Alliance of church, community groups and credit unions come together to address the problems that we all see. For me, the choice for the church is one of action or assistance after the event. The latter has been the traditional role. My argument is that the church is uniquely placed to offer credit services and compete the pay day lenders out of existence.
The Government has done their bit by radically changing the onerous regulation - we passed the Financial Services Act 2012, which allowed local organisations for the first time to set up and compete with traditional big 6 banking. The Government has cleared the way. If the Church feels that there is something wrong, something exploitative in the current system, they are now empowered to give body to that vision of a more compassionate, Christian economy.
Local authorities, churches and individual businessmen, with a philanthropic philosophy for their local community, are beginning to answer the call, giving everyone a stake in their own community. This is vital in restoring local pride.
To compete predatory credit providers out of the market the most effective way to live out this principle is for churches, which truly care for and understand the local community, to set up local banks. They represent a more comprehensive and accessible evolution from credit unions, empowering the church to protect the most vulnerable in society - who should only be indebted to the local community. This is not just rhetoric: I am holding a second conference on November 6 in Whitehall, bringing together businesses and local organisations with one clear purpose. We need local banks for our local communities. With God's good grace I have no doubt we can make it happen."
This is my Church Times article (although behind a pay wall): http://www.churchtimes.co.uk/articles/2013/1-november/comment/opinion/christians-should-step-in-to-found-local-banks
Subscribe to:
Posts (Atom)