The Monmouthshire Building Society is a classic small, mutual lender.
With assets of £976m, it ranks 15th in the UK’s table of building societies, and despite the competition from others, and susceptibility to economic headwinds, its new chairman Haydn Warman said this gave it certain advantages.
He said: “One of the great advantages of our size is that we can be nimble; we can react to developments in the marketplace and we can be flexible.
“One of the recent developments is the increased interest in self-build properties, and funding of those properties. We established there was a growing interest in this, funding there had not always been straightforward, and we were able to look at this and look at our products. Some of the bigger players tend to be a little slower in reacting.”
There are other advantages to not being a big bank – being local and having lots of branches on the ground is a big draw to Monmouthshire members, 80 per cent of whom come from south Wales and the west of England.
Mr Warman said: “People value the fact that we are owned by our members, and we are run and controlled in Newport, and not by an anonymous outfit in the City of London. We’re approachable, and that’s what people value.
“The branch network is very important, particularly for saving members – a number of them are on first name terms with the branch staff. They see the same faces month after month.
“There’s a nervousness with the larger organisations – who are they dealing with? Whereas with a local building society they know who they’re dealing with.”
After having served four years as a non-executive director, in October Mr Warman was appointed as the company’s chairman. Prior to this was at neighbouring – and bigger – building society the Principality, at which he had risen through the ranks to become general manager.
A lawyer by training, Mr Warman’s non-executive role is to lead the board, making sure it sticks to its strategic direction, as well as ensuring it acts in the interests of its members.
He said: “My role is to check and challenge the executive. It’s demanding, I won’t pretend otherwise. It’s keeping yourself fully informed as to what’s going on in the business given the welter of information you receive; challenging where appropriate, and ensuring we are aware of the expectations of the regulator.
“If a chief executive is not subject to check and challenge, there is a risk that things may go awry. The experiences of Northern Rock and RBS should be a lesson to us all that we have to be on our toes and discharging our responsibilities effectively.”
He added: “I have always found without exception throughout my career, if you have good non-executive directors you have a good outcome.”
But there are more immediate challenges for the Monmouthshire to deal with. Gross mortgage lending in the past year was £157m, and the current state of the cooling mortgage market is causing some concern.
“Cooling prices can affect demand for mortgages if property prices are not going to show the growth they have in the past,” Mr Warman said.
“Over the past 12 months, the Nationwide annual house price index showed an annual increase of 9 per cent to the year to the end of October. People can see the value of their asset increasing at a sensible rate, but if there are signs that these prices are cooling, and not increasing as they have done in the past.”
But despite recent signs of a slowdown, the Monmouthshire still operates in a market in which there is a lot of competition – and not just from Principality down the road.
Mr Warman said: “There’s undoubtedly been keener competition over the last 12 to 18 months, We’ve seen far more activity and more lending at higher percentage loans for first time buyers.
“If interest rates rise, there will be pressure for interest rates on savings accounts to increase, we have to respond to that.” The extent of interest rate rises to borrowers depends on how competitive the market is at that time, he said. “But we strive to be as competitive as we can, and maintain our place in the market.”
Mr Warman’s past as an executive director of the Principality has been useful in his current role, informing him of the kind of checks that are needed. And his legal training has also held him in good stead.
He said: “A lawyer should have an analytical approach, and that’s very helpful when looking at management issues.”
Having spent most of his career in building societies, and been through the financial crisis, Mr Warman is happy in his role – the society has seen a steady rise in profitability over the last few years. For 2013, the society posted a profit after tax of £3.1m, which was up on £2.7m the year before.
His explanation? “People have become more wary of financial institutions in general. I believe we are seen as not having been tarnished as much as others have in the last seven years.”
Melanie Tringham is features editor of Financial Adviser
2014 Chairman, Monmouthshire Building Society
2010 to present – Non-executive director, Monmouthshire Building Society
2011 to present – Deputy chair, University of South Wales
2012 to present – Non-executive director, Royal Welsh College of Music and Drama
2009 – 2013 Non-executive member, audit and risk management committee, Wales Audit Office
2002 – 2010 Executive director and secretary, Principality Building Society
1998 – 2002 General manager and secretary, Principality Building Society
1994 – 1998 Secretary, Principality Building Society
1989 – 1994 Assistant general manager, customer services, Principality Building Society
1988 – 1989 General manager, lending and banking, Norwich and Peterborough Building Society
1985 – 1988 Assistant general manager, mortgage lending Principality Building Society
1978 – 1985 Lawyer, Welsh Office legal department
1974 – 1977 Lawyer, private practice
