darlington building society
The Mail on Sunday and its associated financial news website, thisismoney.co.uk, has been encouraging members of building societies to write to their chief executives with a series of questions, which will then be collated and used in articles. The newspaper has even produced a template letter in case our members go off the Mail’s message! We are very happy to answer any member’s questions.
We haven’t received many template letters but in order to be open and transparent to all members I’m using our website to publish our reply to the questions in the Mail on Sunday’s letter:
Dear Member,
Everyone is aware that we are presently facing one of the toughest financial markets for years. This has a knock-on effect into the whole economy and the recession of 2009 has been deeper and longer in the UK than in most other countries. So how does this affect Darlington Building Society?
As you know, our financial year end is 31st December 2009 and we will shortly be publishing our results, however, I am conscious that some members would like some feedback before the results are published. When I took on the role of Chief Executive I pledged to do everything possible to make Darlington Building Society stronger and to ensure our long-term, independent future.
Can we afford to remain independent?
The question really is can we afford not to remain independent? We have a long tradition to protect. There are now only two building societies based in the North East of England. At Darlington Building Society we are working our way through the present global crisis - without the help of the government. The large firms based in the City of London needed taxpayers support to survive. We want to keep your Society based here in Darlington where it can continue to look after local interests.
Can the Society afford to remain independent and still offer competitive rates to both new members and existing ones?
Writing for the website This Is Money on 14th December 2009, Adrian Coles the Director General of the Building Societies Association said: “I’m deeply concerned about the unfair competition that has sprung up in financial services. Northern Rock, an institution blessed with a 100pc Government guarantee on all its deposits has been allowed by the European Commission to split into a ‘good’ bank and a ‘bad’ bank. The bad bank has been left holding the Rock’s toxic rubbish while the good bank is free to return to the market in a stronger position than most of its competitors. Then there are the partly-owned banks Royal Bank of Scotland and Lloyds Banking Group, they do not have explicit guarantees on deposits, but the government is giving them a helping hand. Meanwhile NS&I’s sudden increase in rates last month propelled them into the best-buy lists, adding to the distortion in the savings market. The icing on the cake was the announcement of Lord Mandleson’s plans for the People’s Bank at the Post Office. The Government needs to rethink its plans. It is already distorting the market in retail financial services and undermining building societies’ valuable contribution. We are not asking for special treatment, just a playing field that is level and fair.”
But being competitive is more than simply offering best buy rates. It’s about offering great service through friendly staff who know the market and know the area. So I was delighted when Darlington Building Society won the Regional Lenders category of the Mortgage Finance Gazette award for Treating Customers Fairly.
What steps are you taking to ensure that Darlington Building Society weathers this horrible financial crisis?
In my presentation at the Annual General Meeting in April 2009 I said that we would return to our traditional values and strengths. To this end we will exit the property development market, although we will do this without selling assets at unreasonably low prices. Importantly we will reduce our cost base. Our target is that our 2010 management expenses will be £1,000,000 below those of 2008, so far we are well on the way to achieving this target. We are constantly examining our cost base to leverage cost savings without any detrimental effect on our service through our branches or Head Office.
Will bonuses be paid at the end of 2009?
Remuneration within financial services has been a topical issue recently. The Financial Services Authority has published its recommendations for banks and large building societies. Where possible, we will look to comply with these recommendations and we have already incorporated relevant changes to the Terms of Reference of our Remuneration Committee. These Terms of Reference are now available on our website. No member of senior management was paid a bonus at the end of 2008 and no bonus will be paid at the end of 2009. When any incentive plan is introduced it will be fully proportionate to our both our business and to our salaries.
Are there other strengths which will ensure that Darlington Building Society thrives?
Yes, throughout the recent economic gloom the staff of the Society have been tremendous. The help and assistance of my senior management and directors has been invaluable. The unswerving positive attitude and loyalty of the front-line staff in Head Office and branches has been excellent and I would like to take this opportunity to thank them for all that they do.
I will provide much more detail in our full Report & Accounts along with the Members Review. The full Report & Accounts will be available in branches from early April 2010 and the Members Review will be sent to all eligible members in March 2010.
David Dodd
Director & Chief Executive
We haven’t received many template letters but in order to be open and transparent to all members I’m using our website to publish our reply to the questions in the Mail on Sunday’s letter:
Dear Member,
Everyone is aware that we are presently facing one of the toughest financial markets for years. This has a knock-on effect into the whole economy and the recession of 2009 has been deeper and longer in the UK than in most other countries. So how does this affect Darlington Building Society?
As you know, our financial year end is 31st December 2009 and we will shortly be publishing our results, however, I am conscious that some members would like some feedback before the results are published. When I took on the role of Chief Executive I pledged to do everything possible to make Darlington Building Society stronger and to ensure our long-term, independent future.
Can we afford to remain independent?
The question really is can we afford not to remain independent? We have a long tradition to protect. There are now only two building societies based in the North East of England. At Darlington Building Society we are working our way through the present global crisis - without the help of the government. The large firms based in the City of London needed taxpayers support to survive. We want to keep your Society based here in Darlington where it can continue to look after local interests.
Can the Society afford to remain independent and still offer competitive rates to both new members and existing ones?
Writing for the website This Is Money on 14th December 2009, Adrian Coles the Director General of the Building Societies Association said: “I’m deeply concerned about the unfair competition that has sprung up in financial services. Northern Rock, an institution blessed with a 100pc Government guarantee on all its deposits has been allowed by the European Commission to split into a ‘good’ bank and a ‘bad’ bank. The bad bank has been left holding the Rock’s toxic rubbish while the good bank is free to return to the market in a stronger position than most of its competitors. Then there are the partly-owned banks Royal Bank of Scotland and Lloyds Banking Group, they do not have explicit guarantees on deposits, but the government is giving them a helping hand. Meanwhile NS&I’s sudden increase in rates last month propelled them into the best-buy lists, adding to the distortion in the savings market. The icing on the cake was the announcement of Lord Mandleson’s plans for the People’s Bank at the Post Office. The Government needs to rethink its plans. It is already distorting the market in retail financial services and undermining building societies’ valuable contribution. We are not asking for special treatment, just a playing field that is level and fair.”
But being competitive is more than simply offering best buy rates. It’s about offering great service through friendly staff who know the market and know the area. So I was delighted when Darlington Building Society won the Regional Lenders category of the Mortgage Finance Gazette award for Treating Customers Fairly.
What steps are you taking to ensure that Darlington Building Society weathers this horrible financial crisis?
In my presentation at the Annual General Meeting in April 2009 I said that we would return to our traditional values and strengths. To this end we will exit the property development market, although we will do this without selling assets at unreasonably low prices. Importantly we will reduce our cost base. Our target is that our 2010 management expenses will be £1,000,000 below those of 2008, so far we are well on the way to achieving this target. We are constantly examining our cost base to leverage cost savings without any detrimental effect on our service through our branches or Head Office.
Will bonuses be paid at the end of 2009?
Remuneration within financial services has been a topical issue recently. The Financial Services Authority has published its recommendations for banks and large building societies. Where possible, we will look to comply with these recommendations and we have already incorporated relevant changes to the Terms of Reference of our Remuneration Committee. These Terms of Reference are now available on our website. No member of senior management was paid a bonus at the end of 2008 and no bonus will be paid at the end of 2009. When any incentive plan is introduced it will be fully proportionate to our both our business and to our salaries.
Are there other strengths which will ensure that Darlington Building Society thrives?
Yes, throughout the recent economic gloom the staff of the Society have been tremendous. The help and assistance of my senior management and directors has been invaluable. The unswerving positive attitude and loyalty of the front-line staff in Head Office and branches has been excellent and I would like to take this opportunity to thank them for all that they do.
I will provide much more detail in our full Report & Accounts along with the Members Review. The full Report & Accounts will be available in branches from early April 2010 and the Members Review will be sent to all eligible members in March 2010.
David Dodd
Director & Chief Executive
