While her fellow students were in the bar, Anne Gunther was on the other side of it, developing her commercial acumen, and learning lessons she says have stood her in good stead throughout her professional career.
Gunther is the chief executive of Standard Life Bank (SLB), and chairwoman of the Council of Mortgage Lenders (CML). She graduated with a degree in physics from Nottingham University, although that was only part of the education she received there. “At university, I read physics, although a big part of my education was running the bar and turning it into an extremely commercial operation,” she says.
Although blessed with a business brain, Gunther was not initially drawn to financial services. She explains: “When you are young you have these wonderful dreams that you can combine something you love with what you are going to do as a job. I wanted to be a deep-sea oceanographer and hence the physics degree. I was all set up to do my second degree in oceanography when it became quite clear that there were going to be so few jobs for women, and certainly for deep-sea positions that it was not sensible to carry on down that road. Many people had thought the deep-sea side would open out for women, but because there were so few jobs, it did not. I do not think it was a sexist thing – just a lack of jobs.”
After the prospects of deep-sea oceanography had disappeared, Gunther was pragmatic enough to realise that remaining in the field would see her pottering about estuaries and taking water samples, which was not what she wanted to do.
Undecided exactly where her future lay, she looked at alternatives. “I looked at my experience. I was numerate, logical, and commercially-minded and wanted to keep my options open. I looked at management trainee schemes – in those days there were quite a few with the big companies such as Proctor & Gamble, Marks & Spencer, Unilever and the big banks. But it was Natwest which came up with the best offer,” she says.
Gunther became one of a burgeoning number of women choosing to work in financial services and she believes things have changed markedly over the years, and this change will become even more apparent over the coming years, as more women emerge in prominent positions. She says: “If you look one or two layers down from the top in most big companies, you now have a much more even balance between men and women and we are rapidly seeing women starting to come through.”
Gunther has now been at the helm of SLB since January 2002 and has seen the mortgage book expand significantly. In the six months to May 2004 Gunther’s commercial acumen has become apparent as SLB’s gross mortgage lending has hit £2bn and its total mortgages under management has reached £9.3bn.
The bank has grown its buy-to-let book, and is also pushing forward in the lifetime mortgage market. Looking at the amount of business it wants to do in these markets, Gunther says: “We would like to see lifetime mortgages forming between 5% and 10% of our overall book. Our book is approaching £10bn now so over the coming years I would be comfortable to see around the £500m mark. On buy to let, we would also look at about 5%.”
Although more expensive than mainstream products, Gunther is quick to defend the premium charged for lifetime mortgages. She says: “A lifetime mortgage is balancing two sets of risks. First, it must consider how long people will live, and people are living longer and longer now, which is one of the issues life companies are dealing with. Second, it must assess the house price inflation or deflation risk. As such, there is the risk you have to asses as a mortgage company, as well as the risk you have to assess on the life side. You need to price in two risks and not one, and the fact that the returns on each individual mortgage are 10 to 20 years down the line, which makes them more expensive.”
SLB was initially launched to broaden the products available from the Standard Life Group. Gunther says the bank is happy with its core clients who are towards the upper end of the market, and has no desire to enter into high volume markets like credit cards. She says it is fiercely protective of its brand and hopes the planned demutualisation of parent group Standard Life will not do anything to harm this. She says: “We are working very hard to make sure that the brand is not affected by the demutualisation. What underpins the Standard Life Bank brand is great service and it is not just how fast and how capably we deal with our customer requests, but what that feels like for the customer.” Generally she believes the customer experience is good, and she is determined that this will not change. She continues: “We are concentrated in two or three sites in Edinburgh and we have people who are tremendously good at making customers feel valued and welcome.”
When demutualisation comes around, Gunther is confident it will pass without a hitch with minimal impact on the relationship between the bank and its parent company. She says: “We are already a wholly-owned subsidiary of Standard Life and we already operate on the basis of making proper commercial returns on that investment to Standard Life. It will be business as usual.”
Gunther does not give the impression of having time on her hands, but any she might have had disappeared when she became chairwoman of the CML earlier this year. Although the position dovetails neatly with her everyday role, it still takes up a few days a month of her time in terms of meetings and commitments.
Her tenure as chair came under spotlight almost immediately when media reports came out over its supposed claim that interest rates would have to double in order for house prices to be held in check. Gunther says the CML was misrepresented, and is quick to praise the press team. She says: “As soon as it appeared, the CML guys were straight on the case talking to the press to explain exactly what had or had not been said, and the degree to which it had been misquoted. There was a big storm in a teacup which rapidly cooled down because of the very prompt action that the CML press people took.” However, Gunther says the episode has made the CML careful about the presentation of future information, but is confident it will not restrict the activities of the research department and the market information and forecasts it provides.
One of the CML’s major roles is in maintaining an industry relationship with Government, and ensuring the market can continue to grow without being stifled. Gunther says: “I am happy with the relationship with the Government, and we worked very closely with David Miles on long-term fixed rate mortgages and with Kate Barker on the housing supply issues.” The market is waiting to see what practical impact these reports will have, but Gunther is generally happy with the changes to the market, already announced through the forthcoming regulation programme.
She says: “The rules are pretty sensible and reflect great common sense. They try to make sure customers can properly compare what they are buying and help let them make a sensible decision. The literature has to point out the downsides as well as the upsides and so the issue then is the level of detail you go to, to make it absolutely identical and the impact that can have on costs. We need to ensure we keep a real balance and that we do not wind up reviewing it all next year and having another go. We need to let it settle down for a while and then see if it is working properly.”
Gunther is confident that the lending community will be ready for regulation when it comes. “All lenders will be ready for regulation and part of the role of the CML in all of this was agreeing with the Financial Services Authority two or three years ago that the industry would get a minimum of a year’s notice from the rules being signed off to going live. This was exactly what happened and all the lenders knew this and were in a position to understand what was going on. This has allowed them to get stuck in and do all the right things.”
Financial services may not have been Gunther’s first choice, but she has certainly made it work for her, and the world of oceanography’s loss is the mortgage market’s gain.
