On first impressions, the chief executive of General Electric (GE) Home Lending is the archetypal straight-talking South African. Colin Shave appears to be as direct and articulate when discussing his vision for GE as he is when debating over the Springboks’ chances of success at the next rugby world cup.
In a way, he is also the epitome of GE. This global giant now operates six business divisions in 160 countries, and employs more than 300,000 staff who brought in over £152bn in revenues in 2004. And since joining the multinational in 1976 Shave has worked his way up the corporate ladder in several different countries, building up successes while developing expertise in different sectors and departments, and applying the same basic principles of success to each role.
But while on the surface he may seem like the poster boy for GE, Shave acknowledges he has played the game, and has used the organisation’s global reach to help shape his own career curve. Talking about his first few postings, he admits to having a game plan, because in those days people really needed to at least ‘punch their card’ in the US in order to succeed.
He says: “I eventually went to the corporate headquarters in Fairfield, where I was a financial analyst in the offices of the CEO. While the title sounds impressive, it was really the lowest form of life in the headquarters and I think the only person who was impressed was my mother.”
Following this, Shave held a similar role at GE’s card services business in Connecticut, before moving into general management, as senior vice-president and general manager of the Southern Business Group in Georgia.
Growing success
Perhaps surprisingly, given his current position in the UK residential mortgage market, his career in home lending only began in 2003 when he joined GE First National Home Lending as senior vice-president for client development at GE Consumer Finance – Americas. And he only took over the role of chief executive of GE Money Home Lending in March 2004, following a year as chief executive of First National Home Lending. He now has responsibility for Igroup and First National.
Igroup became a GE company in 2001 and First National followed in 2003. In January 2004, the Igroup and First National brand businesses combined to form GE Home Lending (GEHL). Then in October 2005, GEHL re-branded as GE Money Home Lending. The igroup and First National brands are to remain on its first and second mortgage products for the immediate future. In the unsecured division, however, all products are now branded GE Money, which is an indication of where the overall brand is heading.
Growth and success are key to both Shave and GE, and he has a clear vision of where he wants to take the group. GE Money Home Lending now has more than 500,000 borrowers and, in 2004, lent more than £5bn in mortgages and secured loans. To give some indication of the seriousness with which GE is taking its incursion into the UK mortgage lending market, Shave says: “We are a pretty decent sized section of GE Consumer Finance, and GE Consumer Finance is probably the second or third largest section within GE. This is a significant commitment for GE and is a significant strategic platform.”
When looking for comparisons among the immediate competition the obvious parallel is to look for another global behemoth, and few leap out as strongly as General Motors. GMAC-RFC.The General Motors Acceptance Corp’s (GMAC’s) lending subsidiary has been one of the major successes in the UK lending market, climbing up the lending tables to break into the top 10 last year. However, General Motors has struggled in recent years, and has been forced to offload a number of its arms as it tries to stabilise its position. GMAC was one of its crown jewels, but earlier this month it entered into a definitive agreement to sell a 51% controlling interest.
Conversely, the fortunes of GE have been increasing, and the world’s most valuable company again posted strong earnings increases last year. Nevertheless, while the latest figures from the Council of Mortgage Lenders show that GE Money Home Lending is the UK’s 14th largest lender, it has not yet threatened to overtake GMAC in terms of market share. Shave denies this has anything to do with branding, although he admits the long-term goal is to operate under the GE brand.
He says: “Ultimately it will happen. At the moment the platforms and systems are still separated and we are focused on trying to unify that. We will end up with one brand and it will be the GE Money brand – that is the way we have gone everywhere else in the world. The fact we are on different systems and platforms, particularly on our second mortgage business, has made it a little more difficult to unify. When you come in and acquire businesses there is a certain value attached to the brands and it is easy to underestimate that.”
While others speak of the advantages and disadvantages of operating within large corporations, Shave is adamant one of the big advantages of being part of something as huge as GE is practice sharing, and he says it is something the company takes a huge amount of trouble over to ensure it happens.
Shave has already been to Hong Kong this year for an annual meeting with executives from all over the world within GE Money, where he says all the company heads have the opportunity to cherry-pick the best ideas – when they think there will be a strategic fit.
As a relative newcomer to the UK market himself, Shave is interested in the speculation surrounding new lenders planning to come in to market. For Shave the question is more about how long these competitors are going to be around. In his view a lot of the people that are coming into the market now are making their money on securitisation deals but not necessarily in the mortgage market. Perhaps contro-versially, it is suggested they are not necessarily in the market because they think they want to have a long-term commitment. Shave says it is more a case that they need assets to feed securitisation vehicles. As such he is not unduly concerned that some of these big playerswill bring with them something that is unique.
He says: “If you look at some of the players that have come in, they do not come in with huge mortgage knowledge.The other thing is if you have a securitisation model you have to feed the machine volume all the time. It lives on volume – if it starts to slow down it is almost like letting air out of a balloon. I think it will create some interesting dynamics in the market.”
Specialist role
He is equally forthcoming as regards how the new lenders will get their products to market, and acknowledges the role packagers have played and continue to play in the specialist markets. However, he feels strongly that the infighting and personal attacks are not helping anyone. He says: “When people start to have public arguments it is never a good thing. I certainly think the whole demise of the packager is completely overrated.”
Even a global giant such as GE cannot survive without distribution and he freely admits the lack of a branch network precludes its entrance into the UK’s prime market, but he is not unduly worried as he does not view it as profitable business.
So when GE becomes the single brand, what is next for the lender and for Shave personally? He is adamant the group will become one of the dominant lenders in the UK – and just as adamant that GE’s commitment to the market is matched only by his personal commitment to GE.
If his past achievements are an indication of GE’s chances of success, we could be seeing the first real shift towards a global financial revolution.
