Most people regard gardening leave as something of an irritant. The endless days wondering whether to play golf or catch up on reading of the mortgage magazines without actually being able to comment sounds pleasurable at first, but then ends up being a monotonous period of tedium.
However Guy Batchelor, executive director, sales and marketing at Lehman Brothers, breathed a sigh of relief – for a short moment at least – when he was put on gardening leave, following his departure as sales and marketing director from Platform. For Batchelor, it was his first major break following 26 years of working in the financial services market. He confirmed in July 2006 that he would be leaving the company in the New Year, following a nine-year stint at the lender.
For the first couple of months he indulged in a spot of golf and tennis and spent time with his family. By mid-August, he started to get itchy feet and went to work for Whoopsy Daisy – a charity that looks after parents and children who have cerebral palsy – for nearly three months. Batchelor still had his role as chairman of the Intermediary Mortgage Lenders Association but finally got back to work on 29 January.
The journey to Lehman Brothers was pretty much carved out as soon as Batchelor left school. When he left Brighton College with A-levels, Batchelor’s parents were worried about what direction he would take. Several regional financial services appointments later, he made the move to become a life inspector for Scottish Life in 1984 which he genuinely describes as “great fun”. As this was pre the Financial Services Act, business was buoyant and the mortgage endowment scandal had not yet broken.
He moved into mortgage lending in 1989, and joined the centralised lender Mortgage Trust, under Frank Eve, now managing director of Frank Eve Consulting, as a regional sales manager for the South coast. Batchelor experienced the property crash in the early 1990s but came out largely unscathed, becoming a new business manager and in 1994, the corporate sales manager.
He then joined the Money Store, the forerunner of Platform as sales and marketing director to set up the lender’s intermediary arm, “all by myself and with one temporary personal assistant”. He had some company though, as his ex-colleague from Scottish Life, Peter Beaumont, now chief executive of Mortgages Plc, came along too as head of sales. In the first year, Batchelor recalls they lent £100m. At the time of leaving Platform, the lender had lent about £4bn.
Accumulation and growth
Now installed at Lehman Brothers, his roles and responsibilities at the group have appeared to accumulate and grow. “I joined at the end of January and was appointed to the European Capital Division, assuming the role of executive director, responsible for franchise development in the firm’s European mortgage capital business,” he explains.
“I was then asked to join the UK division as an executive director, sales and marketing when John Prust, director of sales and marketing, left in February. My role is quite straightforward really and fairly similar to what I have done in the past but across a multiple-brand basis. I am responsible for all the sales, marketing and distribution in the UK for the Lehman Brothers Mortgage Capital Division.
“For the present, that involves four brands, three first charge brands – Preferred, Southern Pacific Mortgage (SPML) and London Mortgage Company – and also SPPL, the second charge personal loans brand. Obviously I have another brand to launch.”
Batchelor is referring to the announcement this spring that Lehman is to launch a new direct-to-broker lender in the first quarter of 2008, which will focus on specialist mortgages. The group has confirmed that it wants to expand its multi-brand proposition both in terms of product and distribution channels. The new venture will be run under the same management team in charge of its existing brands, though it will also appoint new sales executives. There has been speculation that Louis Kaszczak, business development executive for the broker direct distribution channel, will take the reins of the new venture but Batchelor would not be pushed further on this.
But how can yet another intermediary-focused lender be justified in what is becoming a very crowded market – particularly when it comes to specialist lending? And can Lehman Brothers UK cope with another brand?
He says: “I come from a background of single brands, and have now moved to a multi-brand scenario. I can say that we will keep our multi-brands.” The three first charge brands are all in the packager sector, with 90% of business written through packagers. But these brands, according to Batchelor, have slight differences in what they do. Preferred, for example, has a high level of manual underwriting. Underwriters at Preferred are probably more flexible than the average sub-prime lender – they are allowed to have exceptions on products, criteria and property.
Batchelor describes it as the “flexible high touch brand.” SPML is slightly different. It tends to write its business more along a straight curve, with less flexibility, pricing is a bit better in certain areas and it tends to be in the more near-prime to medium-adverse areas. LMC tends to write larger loans and deals with different intermediaries to the other two.
Batchelor says: “I was quite interested coming into the company to see what share of the packager market Lehman has.” This figure Batchelor keeps firmly under his hat. “It is our belief and strategy that we want to continue with those brands and focus even more on the packager market because we believe we can increase our market share even more,” he says.
Batchelor denies there was a groan from the intermediary market when Lehman Brothers announced that it would be launching a broker brand. He says: “The key thing for us is that all the large sub-prime lenders have some form of broker distribution and there are a lot of brokers out there who do not want to deal with a packager. It was important to us that our packagers understood what we were doing with our three brands, as we did not want to frighten the market.”
He confirms that the new brand will not just be focused on non-conforming mortgages but also on specialist products, so the product range will include buy to let and conforming self-certification.
Batchelor shrugs off the suggestion that there may be some exasperation in the market as yet another non-conforming distributionary lender launches. “There was no grumbling at all. In broker feedback sessions, we found that brokers need choice, whether to go directly through a lender or a packager. The choice also depends on the case sitting in front of the broker. These days, a lot of IFAs and mortgage brokers have found it more simple to source near-prime and light adverse products themselves and a lot of intermediaries are up the curve on technology, using online decisions, online applications and point-of-sale offers. It is all about choices.”
As well as looking after the sales, marketing and promotions for the brands, Batchelor will also be looking to make sure all the point-of-sale technology is put into the business into the best possible way. He says: “I need to make sure it is best of breed and that the returns of the business and the risks we take are correct.” London Mortgage Company, Preferred and SPML have already announced the launch of automated valuation models (AVMs) provided by Hometrack.
Since his arrival, Lehman Brothers has revealed a £4m budget for marketing, as well as a recruitment drive for three senior figures. The firm aims to develop its multi-brand marketing strategy and has been on the recruitment trail with advertisements appearing in the national press. One of the roles was for the director of marketing.
Speculation continued to grow as to whether Batchelor’s ex-Platform colleague Paul Hunt would be joining him in the role of director of marketing across all the brands. The newly-created role, reporting directly to Batchelor, was inevitably and eventually announced as filled by Hunt in June.
Brand values
Naturally, the concept of ‘brand’ is very important to Batchelor. He says: “The idea is very important, particularly when you are operating with multiple brands because you need to have separation and establish value. I have come in and inherited these brands that have significant value in the market. I have to strengthen them, separate them and ensure they are doing different things. Brand is quite an interesting subject because it is not just about the name and the logo, but also about what it does in the future. This is what we are working on at the present time.”
It would not be inconceivable for a media or marketing executive at Lehman Brothers to associate the parent name with the five subsidiaries more closely, just like Abbey has done with Santander. But Batchelor is not convinced. He says: “We will trade under the existing brands. We will promote the brands heavily as they are at the present time. There is no reason to push the Lehman name.”
While creating and strengthening the brands, he is still creating a new team as he waits for Hunt to come back to the Batchelor fold. He says: “I am pulling a team together of seven direct reports. I have to develop the team fully now to do our best so we can get the job done.” So far, Batchelor has Roger Taylor, director of sales and acting head of SPML, Sean I’Anson, who was head of partnership at Preferred and is now acting head of sales at Preferred, and Mark Philips head of internal sales. Despite the high profile acquisition of Paul Hunt, Batchelor lost John Prust early in the year, along with Lynsey Mitchell and others – so competition for seasoned professionals is fierce.
Meanwhile, Batchelor is helping Lehman Brothers establish a values programme at the group and a service academy for staff. “We are pretty grown up as a business. The business is very entrepreneurial and we are trying to build up a strong culture to take the businesses to a higher level. We are one of the major players in the non-conforming market but it is not just about volumes. It is about lending sensibly and treating customers fairly.”
So although Batchelor, a seasoned professional, is not starting with a blank piece of paper at Lehman Brothers, he is set to create a multi-brand proposition forcing each lending arm to stand up and account for itself in a vigorously competitive environment. n
