Clydesdale Bank goes back to the future
Clydesdale Bank Chair Jim Pettigrew CA and CEO David Duffy outlined their plans for the bank’s future at an ICAS members event.
Clydesdale Bank has gone “back to basics” with a new future focused on customers and community, according to its chair and chief executive.
Speaking at a packed ICAS event, which traced the history of the bank from its birth in 1838 to its recent decoupling from National Australia Bank, Chairman Jim Pettigrew CA and CEO David Duffy also set out their vision for a new Clydesdale based on proven values.
ICAS President Jim said that Clydesdale was returning to its roots and the ambitions of its founder, James Lumsden, to create a “community bank”. This was being achieved after a period of uncertainty and tough times which included some ill-fated expansion south of the border in the early 2000s.
Jim said that vision for a new future for the bank had “lit a fire in him” and came about as NAB declared its decision to focus more on its Australian interests and sell off the Clydesdale and Yorkshire banks in 2015.
A bank that is really focused and is really connecting with the local community and making a genuine difference.
He said: “I could see the potential in this business and in an Initial Public Offering (IPO), and that lit the fire in me. It was never going to be easy but the aim was to get the business into public ownership and to create a business going back to what James Lumsden called a community bank.
“A bank that is really focused and is really connecting with the local community and making a genuine difference.”
Jim said the bank needed “top capability at leadership level” to forge a new future and that included new Chief Executive David Duffy, the man who brought ailing Allied Irish Bank back into profit.
Jim said: “David had a track record in business transformation, he shared our vision and our passion around culture and how you treat the customer. He saw how we needed to connect this bank with its great history and connect with the new Digital agenda.
“We wanted to create a new institution in public ownership which is really serving Scotland and Northern Britain.”
David said he was on the verge of retiring having achieved what needed to be done at AIB, when suddenly a great opportunity arose at Clydesdale.
He told the audience: “I thought this was the best opportunity to go back to the principles of what banking was, before banks became big, global and wrecked everything. This is a community bank.
“When I looked at the Clydesdale and at Yorkshire as a component of it, and I talked to the Group, I thought that this was the one bank that still had the potential to go back to its roots.
“It still had loyal brands, it still had customers who cared about the bank. They were disappointed and when I spoke to them and I explained that we wanted to go back into the communities, and bring banking back to a basic level of community service, the reception was phenomenal.”
The first steps were to gain control and this was achieved by creating a compelling story of the bank’s future for Australia, US and UK investors. This was centred on going “back to basics” and being “local and community-oriented”.
With sights set out on the IPO, the bank “toughed out” a downturn in the market and focused on long-term “buyers of quality”.
However, David said the bank faced a true test of integrity on 1 February, 2016, the eve of the scheduled IPO on the London Stock Exchange.
The end result is, the deal was done, we are independent now for the first time in about 100 years and we have a very strong board with a fantastic chairman.
An unnamed agency asked for last-minute information about Clydesdale’s short-and long-term deposit rating.
David said: “For a bank, that’s like having a tourniquet on your blood supply. The issue was that, even though this was not material (to the IPO), if we had done the transaction without talking to the investors, and two days later I had to ring everyone and say ‘look there’s a rating issue but it’s not a problem’, the very first question they would ask was ‘did you know?’. And there would be no integrity in saying ‘yes’.
David told the audience that the decision was then taken to delay the IPO by 24 hours, which provided time to respond to the query.
Despite the risks of losing the deal and consternation among some investors, it was agreed to “stand firm on integrity”, he said.
With the issue resolved the IPO went ahead and David added: “The interesting thing was, the transaction was better than 24 hours previously. Some very big investors came in and they said ‘we really liked what you did there, that took courage’ and that was the kind of team we wanted to work with as investors.
“The end result is, the deal was done, we are independent now for the first time in about 100 years and we have a very strong board with a fantastic chairman.”
Pictured above: Clydesdale Bank CEO David Duffy (right) with ICAS CEO Anton Colella (left) and ICAS President and Clydesdale Chair Jim Pettigrew CA.