Virgin Money boss Gadhia is ready for a long run at the top
JAYNE-ANNE Gadhia admits she is not built for running but managed to ‘ stagger slowly over the line’ in this year’s London Marathon in six hours and 23 minutes. At 6ft 1in, the statuesque boss of Virgin Money dwarfs the male banking bigwigs who took part in the race, including Barclays chief executive Antony Jenkins and Bank of England Governor Mark Carney, who clocked an impressive 3hrs 31mins, beating Jenkins by an hour and a half.
Gadhia lagged behind her marathon rivals but the 53-year-old is a fierce competitor.
As chief executive of Virgin Money, the bank backed by Sir Richard Branson, her job is to give rivals a run for their money.
Since buying the good part of stricken lender Northern Rock from the government in 2012 in a cut-price deal, Virgin Money has become a significant force. It is also now a listed company, with 2.8m customers.
Stripping out the cost of its successful float on the stock market last year and a final payment to the Treasury for Northern Rock, the firm more than doubled profits to £121.2m after a surge in mortgage lending.
It plans to expand after snapping up the rump of US operator MBNA’s credit card business, bringing in 675,000 customers.
And it launched a current account where customers can deposit and withdraw money but do not have an overdraft facility.
Predictably, Gadhia believes the current account market is in dire need of a shakeup. She is awaiting keenly the results of the Competition and Markets Authority’s probe into the banking sector, launched amid fears that millions of customers are being overcharged and underserved.
One key question it will address is whether the traditional free ‘in credit’ banking model, where customers do not get charged for current accounts if they stay in the black, is working.
Gadhia is adamant it is not, describing the model as anti-competitive.
‘The big banks have got huge books of current accounts that claim to be free to customers. But broadly speaking, we know there is no such thing as a free lunch – cross-subsidisation of products is a bad thing.’
She says banks can only offer free banking to those who stay in the black by hitting customers who breach their overdraft limit with hefty penalty fees and stratospheric interest rates .
TO BOOST competition, new ‘seven- day switching rules’ were introduced in 2013. It was hoped this would make it easier and quicker for people to switch banks, prompting lenders to offer better products and service.
But although the numbers moving account have increased, it has not made a dramatic impact
The answer, Gadhia insists, is for people to keep the same bank account and sort number when they switch bank account. The big banks claim this would be hugely expensive and make little difference, but Gadhia is convinced this would transform the industry and provide a better deal for customers.
She says: ‘As soon as you could take mobile phone numbers with you then the companies had to make them sexier – you could say that led to the Apple Watch.
‘If you think about that as the inspiration for innovation, there’s no reason at all to think that in the digital world current account banking cannot be transformed.’
You have to admire Gadhia’s chutzpah. This may have something to do with her association with Sir Richard Branson, still a major backer of Virgin Money.
A trained chartered accountant, her entry into banking came when insurer Norwich Union joined forces with Branson to form Virgin Financial Services.
Together with Rowan Gormley – who would later set up Naked Wines – Gadhia founded Virgin Direct which sold investments and insurance. In 1997 she launched the Virgin One account, which offered flexible mortgages.
Royal Bank of Scotland bought out Virgin’s stake in the mortgage venture in 2001. This alliance would bring her into contact with Fred Goodwin, who was chief executive of RBS from 2000.
Gadhia worked for the disgraced Goodwin, who helped steer RBS to the brink of collapse during the financial crisis, for five years, running its £65bn mortgage business.
Alarmed at the risky behaviour of the bank, she phoned Branson who had always told her she would be welcomed back.
The timing of her departure in 2007 was immaculate, coming little less than a year before the bank fell to its knees.
Her stint working for Goodwin has clearly affected her outlook on leadership, prompting her to remark that the financial crisis may never have happened if more women had been in charge.
SHE says: ‘ It’s not just about women. It’s about not having an alpha male culture but having a more feminine, softer culture.’
She says: ‘My experience over the years is if we try to do the right thing by customers and try to run a good business, actually the profits will follow because people want to support something that’s clean and simple and straightforward and puts the customer at the heart of what it does.’
Asked if Branson is also an alpha male, she responds quickly: ‘ Ooh no, I don’t think so.
‘He’s a very interesting mix of different things because obviously he’s an action man and an adventurer – so, alpha to that extent.’
Gadhia, who gets her surname from her Indian husband Ashok whom she met at university, lives in Edinburgh but divides her time between London and Newcastle.
Compared to most bank bosses she is approachable and unguarded. It might have something to do with her Midlands roots – she grew up in Stourbridge. Her father was an electrician and her mother started out as a bank cashier.
Apart from running, she spends most of her spare time ferrying her 12-year-old daughter to athletics, horse-riding or tennis practice.
Gadhia also admits to being a ‘very loyal’ fan of 1970s teen heartthrob Donny Osmond and she is a follower of Manchester United.
Some will think she has dubious taste in music and football clubs, but her track record in running a challenger bank is impressive.