Doing good stuff in the Community

May 18th, 2012 posted by: jon.hall

Yesterday was one the best days of the year so far for me. Along with Sara and Scott, our Colchester branch manager, I visited the Colchester & Tiptree Toy Library to hand over a cheque under Saffron’s community funding plan.

The library was set up in 1984 to work with parents and their children, in particular those with special needs and from low income backgrounds. The group also provides respite sessions for families with children who have special needs and lends toys and equipment.

During the visit I was impressed with the empathy of the volunteers, the enjoyment of the children & the professionalism & dedication of the leaders. I was also impressed by Scott entertaining a child & himself in the ballpit!

I really believe that through the Essex Community Foundation, who manage the Saffron Community Fund ensuring our money is added to by available Government support, Saffron’s members & staff can make a real difference & it’s up to the Building Society to show how being a member provides a direct benefit, in this case to isolated and disadvantaged young people.

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Monthly Economic Snaphot - May 2012

May 18th, 2012 posted by: jon.hall
  • Greek electorate to decide the fate of the Euro.
  • Recession or zig-zag? GDP likely to be skewed by Diamond Jubilee Celebrations & Olympics.
  • Sterling strength has potential to derail economic rebalancing.

The Greek tragedy rumbles on with neither the pro bailout or separatist factions being able to garner enough support to form a coalition so it’s back to the polls June 17. The fear factor is likely to remain in the markets until the outcome of the next election is known (& very possibly longer) given the knife edge that Greece is on at the present time. Notable changes in opinion lately from core state (mainly German) politicians who have let it be known that the Eurozone is far better equipped now to handle the exit of one of its members. Conversely, Spanish & Italian commentators feel the need for continued union & given the significant risk of contagion should Greece return to the Drachma (& in all likelihood default) who can blame them! The flight to quality & consequential fall in Gilt yields, looks set to continue until this whole mess finds some semblance of order. Let’s just hope that the Greek military don’t read their history books too deeply – a coup is all this market needs right now.

The deterioration in the Euro area will have done nothing to improve tempers amongst the MPC as the economy dipped into a technical recession in Q1. Prospects of a UK economic rebalancing will have also been damaged by the recent appreciation of Sterling, especially against the Euro & exporters are likely to face subdued markets for longer than previously thought.

When the Bank of England seemingly paused QE in May they did at least leave the door ajar to further stimulus & the Quarterly Inflation Report appears to have kicked that particular door wide open again. Inflation forecasts are now for 1.6% in 2 years (based on flat market rates) albeit with a finely balanced risk that CPI could still be above target given energy & commodity prices. Growth forecasts have been revised down to 0.8% for 2012 recovering to only c. 2.7% in the 2 year horizon. There may well have seemingly been a recovery in employment data but read between the lines & the increase in those in employment is almost exclusively down to part-time jobs – the UK seems unable to create full-time employment in an increasingly uncertain world.

Worryingly, the next two quarters growth are likely to be skewed by the upcoming 2 day Diamond Jubilee holiday (dampening GDP in Q2) & London 2012 which will likely boost economic activity in Q3. Who’d be a monetary policy guru!! The Bank will have to look through temporary fluctuations & also come to terms with what looks like increasingly sticky inflation in planning through the turmoil. The picture is probably more confused than at any time during the post 2008 crisis new world order & the smart money remains on rates flat for at least 18 months with an ever growing possibility of further monetary stimulus.

In my view I’d expect a greater confidence from the MPC than is evident that QE is finding its way into the real economy, maybe its time to commission some real projects with the funds rather than building cash on bank and corporate balance sheets?

Thanks again to Saffron’s Group Treasurer, Keith Hurley, in helping prepare this commentary, his overall treasury expertise is valued.

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AGM Recollection

May 6th, 2012 posted by: jon.hall

For the first time we’ve posted my AGM presentation online for those that couldn’t attend which I hope is helpful.

This years venue at the Saffron Walden Council Offices let us down a bit, the acoustics were poor so a bit of a learning on production for the future! I reiterate my comment on the night that I’d love to meet face to face those who struggled to hear on the night or any other member.

Attendance was in line with previous years, it was great to see some familiar faces & amongst the new attendees were a few younger members who were encouraged to be there by our guest speaker but also wanted to see Building Society openness in operation.

I think it’s fair to say we’ll never stop trying to increase attendance but a wet night in Saffron Walden is always a challenge - it’ll be interesting to try some online ideas such as live streaming so would be interested in members views on this?

The mood was positive the first question from Brian really was an encouragement to continue on our path of traditional approach with a focus on security.

There was a comment from Tony on a slight enhancement to the Annual Report and then he expressed anger at having to pay another £0.6m to the Financial Services Compensation Scheme. My response agreed that Building Societies suffered a disproportionate amount of FSCS funding from the failed banks but the value of guaranteeing savers deposits was significant and we’ve just to get on with running our business as best we can.

Away from the main Q & A I got a few comments which noted how much savers were being squeezed and were having to look beyond deposit rates for instance to the stock market to get an extra return.

Whilst there were no questions on the night about Executive pay I took a call separately which questioned why I and my team were paid what we were. I noted that it was important to have the requisite team capable of keeping deposits safe & develop better products & services. Certainly salaries are a fraction of banks, any bonuses are relatively small & deferred 3 years & pay is benchmarked regularly. Having said that I recognise I earn a very good salary and am lucky to work in a customer owned business I think is fantastic.

I was really pleased with Jack Peasgood’s presentation on learnings for business from performance in sport. Jack is ex Saffron Walden County High pupil, an elite GB triathlete & is currently studying at Birmingham University. Saffron sponsored Jack a couple of years ago and we’ve got to know each other well. His dedication to his sport came through and the audience really engaged with him. It’s important to me that we learn from younger people and help them achieve their goals especially as its a real challenge at the moment.

The AGM drew a line under a strong 2011 performance.

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The Apprentice; You’re Hired!

March 20th, 2012 posted by: jon.hall

It’s just coincidence that this blog appears at the same time as Lord Sugar kicks off another series of The Apprentice!

We’ve agreed to take on a 3rd apprentice to work from our Frinton Branch. I thought this showed the value of apprenticeships and asked Sara, our General Manager Human Resources to reflect on how we’ve come to view apprentices as an important part of the Saffron team. This is what she said.

‘When we first talked about taking on a young apprentice I will admit to some scepticism. I thought we’d be investing time and energy in training someone and would not see any great benefit. How wrong can you be! Our first apprentice, Jamie, arrived at our Stratford Branch at the beginning of 2009 and immediately formed a great rapport with staff and members. As we were on new territory our Training Manager spent time alongside the Branch Manager delivering the training and induction programme that would get him off to a flying start. Jamie was an excellent ambassador for the Apprenticeship training programme and won an external award for Best Apprentice Role Model in October 2009.

Needless to say we offered Jamie a permanent role and he has gone from strength to strength and after a spell at Brentwood Branch he is now back at Stratford in a supervisory role.

In September 2011 we brought in another young apprentice Bobbie, this time to our Brentwood Branch.  She has also proved to be a great find and we have just made her position permanent. We now plan to offer the same opportunity at our Frinton Branch.

The success we have had can be attributed to selecting the right individuals with a strong desire to learn and also Saffron working well with the external training providers who support the achievement of their qualifications. Also essential is putting the time into on the job training, off site development activity and encouraging coaching and mentoring by role models around them.

It is great to feel that we are helping these young people on the path to a rewarding career.

I have just discovered that Debbie, our Branch Manager at Frinton, also started her career as an apprentice!’

So if you’re an employer wondering whether to look to apprenticeships I think this shows how well the scheme can work! For that first step look to http://www.apprenticeships.org.uk/

Thanks for reading

Jon

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Monthly Economic View; March 2012

March 19th, 2012 posted by: jon.hall

 In the February Economic View I hinted at some early signs of optimism from Japan and the US but that the UK would need some significant positive sentiment before changing the current interest rates ‘on hold’ view.

So where are we a month on?

Is the US turning a corner?
 
With Oil prices rising are there further concerns over inflation & growth?
Can the Eurozone stabilise?

The economic signs coming out of the US have improved further with the Fed seemingly less defensive after its latest meeting & calling prospects for moderate growth. Domestic demand seems to be picking up across the pond & employment / investment surveys seem to allude to an improvement in sentiment.
However, this is not yet a sustainable picture of economic growth & with oil & commodity prices on the rise again, the twin impacts of inflation & subdued investment are a long way from being tamed. Concerns in the middle east, especially with the deterioration in relations with Iran, have had an immediate impact on oil prices at just the wrong time. Add to this the likely increase in food prices in the UK following two very dry winters & the MPC may yet have to rethink its expected lowering path for inflation through the rest of the year.
The Bank of England left rates & QE unchanged at the March meeting but still has some ability to enact further QE later in the year if deemed necessary. While some temporary relief has been found to Greek concerns, the Eurozone as a whole (& perhaps more worryingly Germany itself) is still stagnating. Given its position as our major trading market, this will not bode well in the short term for UK growth prospects & King’s comments that the UK economy is likely to zig zag through 2013 seem well warranted. While growth should rebound marginally in Q1, further increases in unemployment & subdued global demand could well lead to negative quarters in the near future. Further, the impact of QE seems to be reducing as the absolute level of bond purchases increases – QE as a tool is likely to have come near to running its course.
Therefore, hopes will still be pinned on the US, China, Japan & emerging economic powers finding a route to sustainable expansion in order to drive economic growth in the broader European continent. The vicious circle returns at this point to prospects for oil & commodity prices!
Yes there are tentative positive signs which will be welcomed by central bankers across the globe but it is still far too early to see an end to economic pressures & as such rates are likely to remain low for the foreseeable future. Only when clear signs that we are through the worst are seen will rate rises even be considered.
Hopefully this isn’t hedging my bets too much but this is now the second month with a sense of stability and optimism building. Thanks to my Group Treasurer, Keith, for helping form the views
Jon 

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Views from Mutuals & Business

March 11th, 2012 posted by: jon.hall

Since becoming CEO I’ve been selective about time spent not focussing specifically on making Saffron better preferring to be out in branches or listening to calls in the contact centre. This week however I attended a couple of events that were of real value.

The first was a CEO forum on mutual relevance and future direction. When I became CEO I looked to organise this session by inviting all new CEOs taking over mutuals in 2011, of which there were 10 including Yorkshire and the Co-Op. Whilst the final number attending was only 4; Mansfield, Leeds, Nottingham and Saffron the debate was strong. There was a clear view that;

  • mutuals must not be left like the village shop or post office; a good thing that no one used,
  • issues on the high street generally were a problem but a commitment to branches remained reflecting the importance of a physical access to our members,
  • the ‘mutual premium’ was represented in many different ways but that it’s communication was sometimes poor and it was only real if applied through leadership and embedded in action.

The overarching theme around the table was detailed long term  thinking was going on as well as focussing on today. But only by being truly customer obsessed rather than paying lip service could mutuality be the effective difference and advantage it should be.

Also this week I was invited to participate in an East Anglian business leaders evening facilitated by Barclays. Represented in a room at Trinity College, Cambridge were businesses involved in; retail, manufacturing, legal, property and engineering. The general mood was realistic but optimistic. It was felt that

  • we had a further year of depressed conditions to contend with,
  • some M&A was happening driven by stronger players and funded through own cash rather than rely on bank financing,
  • retail was proving the hardest market whereas the US and Asia continued to drive the exporters forward,
  • A shortage of manufacturing resource was hurting in skilled business,
  • Pervading was a likely increase in employment within these businesses in 2012/13
  • Barclays were concerned about the splitting of investment banking plus increased capital requirements which it felt would not loosen credit availability in the short term.

From both meeting realistic optimism felt like the mood but then I’m always glass half full in outlook.

Thanks for reading

Jon

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Do what you do with a passion

March 9th, 2012 posted by: jon.hall

I was reminded of a life lesson by my 13 year old daughter last weekend. It was all quiet at home and I went and found her to see that she’d created a blog with 5 posts that day, a Facebook page and an active twitter feed. This was all built around her love of fashion and fashion journalism.

It just emphasised that the best way is always to have a passion for what you do and do what you have a passion for.

Obviously this applies at home, certainly fits for me at work but also how I spend my spare time battling the sports in triathlon.

Apologies for making this blog closer to home but thanks for reading

Jon

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Monthly Economic View; February 2012

February 17th, 2012 posted by: jon.hall

I’ve been steadfastly avoiding blogging about the UK economy. However I thought it might provide a interesting read for our saving, investing and borrowing members to provide a monthly snapshot. A word of warning, remember that if you get 10 economists in a room, you’ll get 12 views!

 

So what are the current headlines?

 

  • Is the UK AAA credit rating, which determines how much the government have to pay to borrow money, under threat?
  • The Bank of England increased its quantitative easing by £50bn to £325bn, but is that enough?
  • Also is the Eurozone running out of patience with Athens and is Germany contracting!
  • What will be the effect of the US showing tentative shoots of recovery?

 

The announcement of a negative outlook for the UK Government by Moody’s has had no impact on markets & UK yields are still being driven more by growth uncertainties. UK Gilts are likely to remain a safe haven while the Eurozone is unable to resolve its problems & with growth prospects for the UK continuing to be marked lower, it would be wise not to bet on interest rates rising in the near future.

 

Inflation is moving lower & will be one of the reasons why the Bank of England’s Monetary Policy Committee judged it safe to increase QE by a further £50bn in February. It is finely balanced now whether any further increase is on the cards and we may expect a pause. Unemployment rose again but the increase was less than many expected however with a potential for Greek default back in focus & German contraction in Q4 11, the MPC is likely to retain the possibility of further stimulus if global events impact further on the domestic economy.

 

Eurozone leaders, especially in Berlin, will be concerned that releasing the next tranche of the Greek bailout may not be fully effective & it appears clear that the whispers are once again being heard in the corridors of Brussels & Strasbourg about the potential for a future Euro which does not contain Greece. The politicians in Athens, while voting bravely for further austerity measures, may find it hard to push much more through in the wake of civil unrest. Overall however, some solace can be taken from the lack of market reaction to ratings actions against France & Austria.

 

Across the pond there are tentative signs of a growing recovery in the US & President Obama will be hoping that any plausible & passable tax cuts will further support confidence in the US.

 

The Japanese economy is also producing stronger results & this may just be the spark that global markets need to start to find a modest but sustainable growth path. To quote the MPC ‘there are still considerable headwinds to a UK recovery’ but with some signs that manufacturing & exporting are starting to improve, any sign of an improved tone to world economies is likely to return some confidence with UK business. This will be the key as, with falling real incomes & less job security, there is little likelihood of domestic demand driving UK plc at the moment. Expect UK consumer confidence to remain low for some time to come & rates to stay at 0.50% for the foreseeable future.

 

So with an eye on interest rates the markets see no bank base rate changes in 2012 & 2013 and it will need a growing international recovery which takes hold on UK soil to see a shift in this sentiment.

 

However none of this is a prediction and I did predict that Italy would beat England in the six nations recently! Let’s see how things shape up before next months snapshot.

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Keep it simple, Make it personal

February 16th, 2012 posted by: jon.hall

Real life stories are, in my view, the most compelling form of communications, whether it’s to learn from some-one else, to share good experiences, warn others of poor practice or just to entertain.

Of course financial services is a hot bed of such real life stories, unfortunately many of these do not make good reading especially in the media;

Of course I’m very aware that all firms advising on financial products face a challenge in making sure products are understood by those buying them and are of value in their personal situation.

However,  I’m also lucky enough to hear more positive real life stories in connection with how Saffron staff support our members.

  • The way Karen, in our insurance brokers, sourced affordable, bespoke travel insurance for a customer who having reached 70 years old found himself suddenly excluded from insurance or charged an exorbitant amount.
  • How our mortgage underwriter Tom was able to understand how a borrower planned to finish off and finance the self build of their existing property. This enabled them to finish the work and stay in their new home rather than sell it incomplete.
  • Even the way one of our branch managers identified as unusual the way an elderly customer she knew was withdrawing money and on following it up identified she was a victim of fraud.  The police and trading standards later advised that this customer had been the victim of rogue builders who had conned her out of £22,000 and the actions of the branch manager and her staff, prevented her paying a further £7,000 to these people.

I think these real life stories are the best way of showing our personal approach is on the right track, it’s why I’m asking in Saffron’s latest ten minutes newsletter for more of those stories to be shared.

But I think that if you are close to people, take a personal interest and keep what you do as simple as you can we’d all hear more of the positives stories.

Jon

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Mortgage Market Review; why headline grabbing criticism is premature

December 22nd, 2011 posted by: jon.hall

I did an interview on Monday with BBC Radio Essex on the launch by the FSA of the ‘eagerly anticipated’ consultation paper on reform of the mortgage market.

I thought it worth summarising my thoughts;

Whilst a 600 page document will take some digestion I do think headline grabbing criticism is wide of the mark. The FSA has listened to feedback from lenders such as Saffron, the Council of Mortgage Lenders and the Building Societies Association. This means the proposals are much more measured and reflect a substantive approach to avoid lax lending and promote sensible consumer protection. The affordability of mortgages under a range of interest rate scenarios and having a plausible repayment approach are basic tenants I would have thought any reasonable person would support.

A risk based assessment of particular lending markets such as self employed borrowers and bridging has been performed without disproportionate steps to close these markets.

The need for a close working relationship between lenders and intermediaries is sensible which should promote good intermediaries not threaten them and the use of transitional arrangements for some borrowers is very helpful.

In summary the principles are consistent with how Saffron approaches its mortgage borrowers; there will be considerable digestion and extension to policies but not a radical overhaul for Saffron.

Its also important for me that we are able to look into 2012 and be able to support real people with their mortgage needs through specialist and individual assessment, be competitive and innovate. These proposals are supportive of these objectives.

By the way my quote from the above on BBC Radio Essex was; “I think this represents a balanced position at first look. Clearly some borrowers that would have got mortgages before the credit crunch would have found themselves without those offers under today’s proposals. But I don’t necessarily see that as being a particularly bad thing in the current climate.”

Jon

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