THERE is a new man in town at the head of the venerable Airdrie Savings Bank (ASB), but don’t expect any dramatic changes at one of Scotland’s most stable financial institutions, writes Erikka Askeland.
For Rod Ashley, who took the role of chief executive of the ASB on the first day of the year – which happens to be the bank’s 177th birthday – his stewardship of will be a matter of evolution not revolution.
“We are slow and steady. That is what evolution is about,” affirms Ashley.
He has taken over from Jim Lindsay, who has been in the role since 2000 and is now looking forward to retirement and playing more golf.
Hailed at the height of the banking crisis as one of the strongest banks in the UK, the tiny ASB has won a number of admirers. The institution took a £10 million deposit from a group of investors including Stagecoach founder Sir Brian Souter and his sister Ann Gloag, Kwik Fit founder Sir Tom farmer, and the eminent investment banker Sir Angus Grossart.
The extra cash helped the company expand lending and, for the first time, to move beyond the boundaries of Lanarkshire – to Falkirk, where the company opened a high street branch in 2011. Prior to this, the bank has seven branches in addition to Airdrie, including Ballieston in Glasgow, Bellshill, Coatbridge, Motherwell, Muirston, and Shotts.
The company will report on its accounts for 2012 in coming weeks. Last year, the super-conservative bank had raised the amount of money it had loaned – to £48.5m, up from £36m in 2010. But it did not do this on the basis of a wing and a prayer – deposits had risen 5.4 per cent to £137.6m and it had tucked away some into its £15.3m reserves.
The directors had hinted that, in an effort to combat record low interest rates it was thinking of edging into riskier territory and boosting its mortgage book a little more. The company also keeps to what have traditionally been “safe” investments – like UK bonds, which some analysts have warned might be getting too expensive and delivering poor returns.
Ashley says he will wait until the beginning of February to reveal how the bank has performed. However, he insists he is still sleeping soundly at night.
It is a little as if Ashley has been in training for the job for the most of his career. Before his appointment, he was chief executive of the Scotwest Credit Union, which is smaller than ASB – 40,000 members and £45m deposits – but runs on similar principles.
In one of his first jobs as a trainee chartered accountant, he helped establish a credit union for the Strathclyde Police Federation.
He thought it was a “really good idea”.
“I saw how [the credit union movement] was growing in this country and realised how big it is around the world – there are over 80 million credit union members in North America, and the movement is big in Australia, Ireland and Korea,” he says.
He doesn’t like credit unions in the UK being called “behind the times”, even though we discuss a recent visit he has taken to Canada where credit unions are much more like full service banks.
He says there are 110 Scottish credit unions – mainly in the West of Scotland, noting that in Glasgow one in five in the population is a credit union member and that two of the three biggest are based there.
“The opportunities are very much there for the sector. There needs to be some amalgamation to make some economies of scale,” he muses.
“It is still essentially focused on specific savings-and-loan products, and not really so into transaction-based products and not yet into the business side of things. But the rules have changed to allow them to go into that – in terms of having a place in the community and providing community involvement and support, that ethos is still very much the same.”
The different between a credit union and the historical oddity that is the Airdrie Savings Bank is that credit unions are co-operative – one member, one vote – while the ASB is a mutual organisation, run by its board of trustees – who are not paid.
When the ASB started in 1835, it was much like what the credit union was. ASB, along with others, were set up to allow poor folk to put a little aside somewhere safe. The TSB movement, founded largely by Rev Henry Duncan, grew and these eventually merged – except for Airdrie – in the 1980s were then taken over by what is now Lloyds Banking Group in 1995.
It is instructive that while the forerunners of the some of the UK’s biggest banks, and of course, its biggest failures – Royal Bank of Scotland and Bank of Scotland, had been established in the wealthy east of Scotland, while the poor west of Scotland folk were putting their pennies into TSBs.
Ashley does not want the bank he now oversees to be a pioneer. His predecessor, who has been spending time with Ashley in recent months to hand the job over, says the bank traditionally finds it is cheaper and easier to wait until new fangled things are tried and tested. It only brought out a debit card in early 2000s and the bank launched its internet service in 2010.
The bank has an “appetite for lending”, he says, but the trick is finding people and businesses to lend to that will be sure to pay them back. The bank could tap into the government’s Funding for Lending scheme – but it doesn’t.
In fact, the ASB is a miffed at high street banks that have taken the government’s cheap money, which means they don’t have fund their lending on their deposits, like the ASB still insists upon doing. The extra liquidity also serves to dampen interest rates, which harms savers.
“It is not really helpful to us, we haven’t taken money out and people are suffering a wee bit,” admits Ashley.
Many of their customers are also in the sights of high interest payday lenders, which is a cause for concern for Ashley.
“That is one of the areas we are starting to look at. I was talking to some of the branch managers today who have some of our members coming in with their statements. If you take out the loan and pay it back, it is fine – but if you don’t pay it back and rolls it over that is where it becomes a problem.
“We hope this would be the first port of call they come to the next time they need help, too.”
But he does have ambitions for the bank. He does not rule out opening further branches, perhaps even further east than its traditional heartland: “Absolutely why not, I am sure we have customers there,” he says. “But perhaps not The Mound.”
30-SECOND CV
Born: Duke Street, Glasgow.
Education: University of Glasgow.
First job: Assistant gardener.
Ambition while at school: To write a Number 1 hit single.
Car: Honda CR-V. You can easily fit in kids, keyboards and golf clubs.
Kindle or book? Kindle.
Music: Musical theatre.
Can’t live without: Having something to do.
Claim to fame: I appeared, as a dead body, in Scottish Opera’s production of Macbeth at the Edinburgh Festival.
Favourite place: Chateau Ribagnac, Limousin, France.
What makes you angry: I find injustice, particularly in a financial sense, and being unable to do anything about it, difficult.
Best thing about your job: The people I have met here in the team at ASB.