Jeremy Wood joined Nationwide in 1990 and spent the next two decades working on project after project. He held responsibility in many different roles. So why did he leave? “I wanted to be a chief executive,” he says.
The plan worked. Wood became the temporary chief executive of Kent Reliance Building Society as it transformed into OneSavings Bank.
Although one colleague described his achievements there as “a near miracle”, the building society man’s next step was firmly back into the world of mutuals. In June 2012 he took up the post of chief executive at Dudley Building Society.
But Dudley meant more than simply fulfilling leadership ambitions. In moving to the West Midlands, Wood was returning to his childhood home. “Having gone back, you do realise what the area is like,” he says. “It is industrial, it does have its problems, but the warmth of its people is as I remembered.”
Although Dudley may be moving further away from what Wood terms its “metal-bashing roots”, it is still an area where local industry is valued. “We are part of the community,” says Wood. “If you look down the high street you will see some familiar names, and then you will see Dudley Building Society. People associate us with that area.”
Under Wood, though, the mutual’s horizons have opened up. In February, it dropped geographic restrictions on lending. As a result, the rate of lending doubled in a month. The mutual lends through seven packagers and other selected intermediaries. The long-term aim is to have 40% of the loan book based in the region and 60% elsewhere.
As well as the obvious limitations of the branch network, Wood’s intermediary strategy is informed by the cost of upcoming regulation, such as the Mortgage Market Review.
“We have got six branches,” he says. “To have a regulated sales force for a relatively small number of mortgages doesn’t make sense for us. Our decision has been to look at the intermediated market for advice and to concentrate our local firepower on savers.”
Wood describes the upturn in lending as “fairly healthy”. However, he insists perception is important as concrete measures to increase lending: “The move to national was opposite to local that was important. But more important was the fact we announced to the outside world we were open for business.”
The chief executive’s determination to raise his society’s profile has included comments in the press. In September, he posted a sharp riposte to the Financial Conduct Authority’s warning that mutuals might be taking too many risks with niche lending.
Specialist lending does not necessarily mean going up the risk curve, he insists. And some ‘niche’ areas, such as self-employed borrowers, are not really so unusual.
“If we want to lend money to a self-employed person, there is no reason why that lending is any different than someone who is employed,” he says. “You have got to be sensible about these things and the mode of employment is changing in this country.”
One mutual business model coming into question is that of the Co-operative Group. After the group lost control of its banking arm to US hedge funds, one boss after another has blamed the limited options a mutual has for raising capital.
But in Wood’s view, the lender’s struggles can be traced back to some “fairly fundamental decisions”, such as the merger with Britannia Building Society and embarking on large scale IT projects. His own ambitions are more measured. “I don’t think we could raise capital from investors,” he says. “We just are not big enough. So we will grow our own capital. We will generate sufficient profitability.”
Where the building society is likely to show the greatest movement is in the exploration of niche products, such as mortgages for retirees. “We like things that are just on the periphery of the housing market,” Wood says.
He expects Dudley to advance roughly £40m in mortgages this year, with an aim of lending £50m a year in future. “We’re a building society like many others,” Wood acknowledges. “But we think when it comes to the mortgage market we are just as good an option as anybody else.”
