Banking on bigger future
BRITAIN’S challenger banks are falling like ninepins. in many ways, it is a great shame because the services offered by the Big Four lenders are deteriorating and branch closures have left small businesses and private customers feeling isolated.
When Virgin, Tesco and other newcomers joined the fray, it looked as if there was a new dawn.
i know at least one local business which would have tipped over the edge were it were not for the ministrations of Anne Boden and Starling Bank.
Virgin Money’s journey has been fascinating. it started with the task of bringing Richard Branson’s marketing skills to stuffy finance.
it then became a consolidator, buying up most of the remains of Northern Rock and, in 2018, Clydesdale and Yorkshire.
Therein lies a connection. Debbie Crosbie was at Clydesdale before journeying via TSB and on to the Nationwide.
By the standards of recent FTSE 350 bids, the 40pc premium which Nationwide is offering – placing a value of £2.9bn on Virgin Money – doesn’t look generous.
London- quoted companies sell at big discounts and Virgin Money has the penalty of being a bank – and most sell at fractions of book value.
There are complicating factors. Nationwide will have to dig into reserves, which are owned by members, to raise cash for the deal. The Virgin brand contract runs for several more years at a cost of £17m.
Customers of Virgin Money can at least be assured that, as a mutual, Nationwide should be a kinder and gentler owner than the alternatives.
The addition of 3pc of the mortgage market and 8.6pc of credit cards will make Nationwide the Uk’s second- largest retail lender.
Crosbie has made her mark at Nationwide with a stylish rebrand and a staunch commitment to sustaining a branch network needing care and attention.
As a building society, it needs to control costs and accumulate capital. But it doesn’t face the same short-term pressures for payback as quoted competitors.
if Crosbie manages to improve services and maintain a parallel branch network, it could be a force for competitive good.
Barring interlopers, Nationwide looks to be making a shrewd deal. But size is no excuse for letting mutual standards slip.
Halo effect
AS A creative force, Britain’s main commercial channel ITV has few rivals.
There can be no better demonstration of the worth of ITV Studios, the dominant earner in 2023 with £2.2bn of income, than Mr Bates vs The Post Office.
At its peak, it generated 14m viewers. it is running strongly on streaming platform ITVX and, in spite of its eccentric Britishness, has sold into 12 overseas markets.
The studios are on a roll with ‘faction’ as two other productions, the After the Flood drama and Breathtaking, dealing with the pandemic, are attracting plaudits and multi-million audiences.
Nevertheless, last year’s financial results were disappointing, with before-tax profits down 41pc at £396m in 2023.
After the harsh light cast on ITV over alleged bad behaviours on This Morning and Love island, chief executive Carolyn McCall has a much better narrative now.
She is confident a new Talent Code, designed to enforce improved standards, will do the trick.
As the best place in the Uk to attract mass market advertising, ITV suffered from the travails of the economy last year.
inflation is now falling, growth is back on the agenda and this year offers more opportunity with the euro 2024 football tournament a big plus for the second quarter: especially if Harry kane and Jude Bellingham keep scoring.
The £160m investment in ITVX had brought the broadcaster much-needed streaming presence. even more studio output is the way forward.
Katie’s goodbye
DOUBLING up on chief executives in the boardroom never really works. Stuart Machin has dominated at M&S, leaving colleague and digital whizz katie Bickerstaffe in the shade. She leaves in July.
The announcement, on the eve of international Women’s Day, is not best timed.