News - Midlands
The Midlands has suddenly become home to some rather nice, new, shiny brass plates - and all thanks to a sudden influx of people wanting to help handle your money.
The past few months have seen an influx of business bankers setting up or strengthening their presence in the region.
The move began with Alliance & Leicester formally launching a business banking arm in Birmingham in late 2006.
It has been followed in quick succession by the likes of Belgium's KBC launching in Birmingham; Anglo Irish bolstering its Midlands presence with the launch of a treasury arm; Handelsbanken and HSBC each opening commercial premises in Leicester; and - to many the cherry on the cake - Kaupthing Singer & Friedlander opening in the region with the ambitious objective of becoming "the business bank of Birmingham".
Although the Midlands business community cannot fail to be flattered by such attention, the questions remain: "Why here? Why now?" Alistair Hardie is law firm Martineau Johnson's partner, specialising in banking.
He says it is not only new entrants that are driving Midlands business banking.
Players that set up in the region a decade ago, like Yorkshire, Allied Irish and Bank of Ireland, have been busy building their presence.
He adds: "It's well known there's liquidity in terms of debt and equity and the UK is seen as a safe, stable economy in which to invest.
I'd argue that the arrival of so many overseas banks in the Midlands has been largely driven by customers.
So for example the Irish and the Australians - who own Yorkshire Bank - have fairly small home markets, but their customers are investing in UK property.
Where their customers go, they follow." According to Steve Lewis, the recently appointed director of corporate and structured finance at Kaupthing, it is because there is business to be had in the Midlands.
He adds: "When Kaupthing bought Singer & Friedlander two years ago it inherited offices in Manchester and Leeds - a regional network, but with a major gap in the Midlands.
We think there's a real opportunity here." Andy Povey, who is heading KBC's drive into the region, adds: "We originally set up in Birmingham through KBC Peel Hunt, our stock broking arm, which has an office here. "However, Birmingham in particular is attractive because it's the number one provincial city and has a very large and a very sophisticated market." But others believe that the sudden influx of bankers into the Midlands is driven as much by supply as by demand.
Some say that because money is relatively cheap and plentiful, banks are keen to set up in the Midlands as a way of investing their cash.
David Richardson, regional managing director, large corporate, at Lloyds TSB, says: "What is really driving this is that there is a lot of money swilling around, rather than unfulfilled opportunities in the Midlands. "If you are an overseas bank and want to do something in the UK then you start in London and after that you go into a regional capital like Manchester, Leeds or Birmingham.
If you want a network of offices in England, one has to be Birmingham: if it's only one, you open in London." Colin More, regional head of corporate banking at the Bank of Scotland, agrees: "I think it is more supply than demand driven.
There have been a number of additional banks entering the market.
The Midlands has been enjoying a strong property market and a strong mergers and acquisitions market.
That's bound to be attractive to banks." Now older hands will claim that we have been here before - a decade or so ago a number of banks decided that the Midlands was the future and set up offices, mainly in Birmingham, which vanished once times got harder.
Some have stuck it out - Fortis is cited by more than one as the prime case of a bank that showed fortitude - but others took the decision to quietly slip away. It is quite easy to set up a minimal banking operation in the region - one pundit, on the condition of strict anonymity, admitted his bank's presence in the region had once been little more than a manager taking a Virgin Voyager up from London a couple of days a week to serviced offices. So easy come, easy go, if your presence in the region is strictly minimal.
The real test of commitment is when the bank decides to staff up.
Stuart Wilson, head of Alliance & Leicester's West Midlands Business Centre, says: "Banks coming to the Midlands set out with one of two strategies.
It's either go for a certain market segment and see what happens over two or three years and, if it doesn't work, come out.
Or you have the approach such as the one we're taking where you don't look for a niche, but take a long term strategy and build up a broad appeal." HSBC's head of corporate banking in the Midlands, Alasdair Robertson, says: "In the mid to late 1990s we saw the rapid expansion of some European players into the Midlands.
Although that was short-lived, their coming and going did not help with the reputation of the market generally." Kaupthing's Lewis says: "It's a fair point.
If you look back over the past 25 years there is a history of banks setting up in the region, particularly Birmingham, and pulling out at the first whiff of trouble in the economy. "It's so easy to set up a bank in the region - you can play a game with a suit and a laptop.
But if you're serious about it then it takes a lot of work - recruiting good staff that will stay the course is very difficult." Kaupthing's commitment to the region looks fairly solid - it is looking to recruit 20 to 30 staff within the next two years and is set to sign up to high profile offices in Colmore Row, Birmingham's professional heartland.
KBC, meanwhile, has shown its belief in Brum by putting together an initial team of six that will also move to Colmore Row, probably in July 2007.
However, can the new arrivals create a clear identity and market niche for themselves? Every bank claims to be client focussed, results driven, service orientated - if they were not they would soon be out of business.
The question is what can you offer that's different? So KBC, for example is making great play of it Northern and Central European connections, while the Icelandic-owned Kaupthing's point of difference is its regional and entrepreneurial connections and an advisory board made up of some heavyweight Midlands businessmen. David Adams of law firm Browne Jacobson says: "Creating a distinctive offering is important.
The following areas are the key battlegrounds: debt multiples; flexibility of pricing; due diligence - in particular for strong businesses, banks may accept less due diligence; venture capitalist (VC) terms - echoes of the prominence of VCs in the London market are now being seen in Midlands deals; and asset based lending, which is now firmly established as an alternative to more traditional cashflow funding." Andy Smith, business development manager at Co-operative Corporate Bank, says his point of difference has been the Co-op's high-profile ethical stance, which in particular resonates with a certain type of smaller business customer.
He adds: "It's vital to find a niche.
Business banking is still dominated by the big players - they have about 80 per cent of the corporate market. "But that can place us in a good position.
The big boys find it difficult to retain staff, be flexible and deliver what the customer needs.
The big banks seem to be driven by a need to cut costs - customers are becoming smarter and emigrating to banks of about our size." And, although it is possible to see the latest influx of business bankers as following a well-worn, decades old path that leads to the Midlands, those institutions prepared to stay in the market as times get harder can not only survive, but prosper.
Take Yorkshire Bank, which opened in Birmingham a decade ago with a complement of just three people.
It has now grown to 40 on the back of a rather old-fashioned, clubbable style of banking.
Yorkshire Bank's Birmingham managing partner, Debbie Golec, says: "We're not one of the big four or five - why should we pretend to be? We are owned by an Australian giant, which hopefully means we can offer the small local service, but have the big bank back up." Or take the aforementioned Fortis Bank.
According to Jon Howe, its regional director, Fortis opened in Birmingham ten years ago "with nothing" and has not only prospered in the city, but also set up in Nottingham and built up a team of 26 in front line relationships, including ten taken on in the last six months.
He adds: "I hear these words that newcomers will leave when going gets tough and I'm pleased to say that none of it fills me with fear.
We can demonstrate that in our case they're just words. "You thrive if you compete on credit appetite, price, service and relationship.
Provide them and you survive." We've heard what the banks want to offer us, but what do we think of them? As part of our banking feature, Insider contacted more than 100 customers - under conditions of strict anonymity - to discover what they thought of their banks.
Here are some of their thoughts. Mystery Client A In many ways we're happy with how the bank treats us, which is to pretty much leave us alone.
We have recently started to use online banking and our complaints are that the system is surprisingly badly written, is not intuitive and they doubled our charges - we're in negotiation about that! Our other complaint is that while we were a small company with turnover under £31m, we were looked after by a small business adviser who wanted to touch base every couple of years with the sole intention of selling life insurance or pensions.
We were not allowed to make transactions over £310k per day, which meant we had to stagger payroll over two days.
I really had to stamp my feet to be allowed to join corporate services. Mystery Client B Generally speaking we've a good relationship with the bank.
I think this has a great deal to do with the fact we're good customers and don't have issues with cash flow.
That said, problems have been with constant changes of corporate managers, attempts to increase charges when an agreement has been set and charging us for making internet payments on an updated system they insisted we use. Mystery Client C They've a very narrow focus and are only interested in the bottom line.
When businesses are experiencing financial difficulties, these may be short-term and relatively easy to address by looking at a number of factors.
The bank, while claiming to give business advice, only provides a cursory bottom line exercise, which can result in a perfectly viable businesses failing.
Banks claim to provide business advice through advisers, when they clearly don't have expertise, and advice given is geared towards the bottom line and cost cutting rather than looking at how to improve top line performance. Mystery Client D They're keen to offer value added services and keep you informed on new services.
They provide good networking links to other businesses within their portfolio and don't interfere when performance is in line with expectation.
However, administration is inconsistent, leading to errors and unnecessary additional work.
A good relationship manager can make a great deal of difference in both good times and when issues arise.
I'd like more local decision making: some opportunities require quick responses, but are referred to higher levels, leading to missed opportunities.
New bankers on the block
The Midlands has suddenly become home to some rather nice, new, shiny brass plates - and all thanks to a sudden influx of people wanting to help handle your money.
The past few months have seen an influx of business bankers setting up or strengthening their presence in the region.
The move began with Alliance & Leicester formally launching a business banking arm in Birmingham in late 2006.
It has been followed in quick succession by the likes of Belgium's KBC launching in Birmingham; Anglo Irish bolstering its Midlands presence with the launch of a treasury arm; Handelsbanken and HSBC each opening commercial premises in Leicester; and - to many the cherry on the cake - Kaupthing Singer & Friedlander opening in the region with the ambitious objective of becoming "the business bank of Birmingham".
Although the Midlands business community cannot fail to be flattered by such attention, the questions remain: "Why here? Why now?" Alistair Hardie is law firm Martineau Johnson's partner, specialising in banking.
He says it is not only new entrants that are driving Midlands business banking.
Players that set up in the region a decade ago, like Yorkshire, Allied Irish and Bank of Ireland, have been busy building their presence.
He adds: "It's well known there's liquidity in terms of debt and equity and the UK is seen as a safe, stable economy in which to invest.
I'd argue that the arrival of so many overseas banks in the Midlands has been largely driven by customers.
So for example the Irish and the Australians - who own Yorkshire Bank - have fairly small home markets, but their customers are investing in UK property.
Where their customers go, they follow." According to Steve Lewis, the recently appointed director of corporate and structured finance at Kaupthing, it is because there is business to be had in the Midlands.
He adds: "When Kaupthing bought Singer & Friedlander two years ago it inherited offices in Manchester and Leeds - a regional network, but with a major gap in the Midlands.
We think there's a real opportunity here." Andy Povey, who is heading KBC's drive into the region, adds: "We originally set up in Birmingham through KBC Peel Hunt, our stock broking arm, which has an office here. "However, Birmingham in particular is attractive because it's the number one provincial city and has a very large and a very sophisticated market." But others believe that the sudden influx of bankers into the Midlands is driven as much by supply as by demand.
Some say that because money is relatively cheap and plentiful, banks are keen to set up in the Midlands as a way of investing their cash.
David Richardson, regional managing director, large corporate, at Lloyds TSB, says: "What is really driving this is that there is a lot of money swilling around, rather than unfulfilled opportunities in the Midlands. "If you are an overseas bank and want to do something in the UK then you start in London and after that you go into a regional capital like Manchester, Leeds or Birmingham.
If you want a network of offices in England, one has to be Birmingham: if it's only one, you open in London." Colin More, regional head of corporate banking at the Bank of Scotland, agrees: "I think it is more supply than demand driven.
There have been a number of additional banks entering the market.
The Midlands has been enjoying a strong property market and a strong mergers and acquisitions market.
That's bound to be attractive to banks." Now older hands will claim that we have been here before - a decade or so ago a number of banks decided that the Midlands was the future and set up offices, mainly in Birmingham, which vanished once times got harder.
Some have stuck it out - Fortis is cited by more than one as the prime case of a bank that showed fortitude - but others took the decision to quietly slip away. It is quite easy to set up a minimal banking operation in the region - one pundit, on the condition of strict anonymity, admitted his bank's presence in the region had once been little more than a manager taking a Virgin Voyager up from London a couple of days a week to serviced offices. So easy come, easy go, if your presence in the region is strictly minimal.
The real test of commitment is when the bank decides to staff up.
Stuart Wilson, head of Alliance & Leicester's West Midlands Business Centre, says: "Banks coming to the Midlands set out with one of two strategies.
It's either go for a certain market segment and see what happens over two or three years and, if it doesn't work, come out.
Or you have the approach such as the one we're taking where you don't look for a niche, but take a long term strategy and build up a broad appeal." HSBC's head of corporate banking in the Midlands, Alasdair Robertson, says: "In the mid to late 1990s we saw the rapid expansion of some European players into the Midlands.
Although that was short-lived, their coming and going did not help with the reputation of the market generally." Kaupthing's Lewis says: "It's a fair point.
If you look back over the past 25 years there is a history of banks setting up in the region, particularly Birmingham, and pulling out at the first whiff of trouble in the economy. "It's so easy to set up a bank in the region - you can play a game with a suit and a laptop.
But if you're serious about it then it takes a lot of work - recruiting good staff that will stay the course is very difficult." Kaupthing's commitment to the region looks fairly solid - it is looking to recruit 20 to 30 staff within the next two years and is set to sign up to high profile offices in Colmore Row, Birmingham's professional heartland.
KBC, meanwhile, has shown its belief in Brum by putting together an initial team of six that will also move to Colmore Row, probably in July 2007.
However, can the new arrivals create a clear identity and market niche for themselves? Every bank claims to be client focussed, results driven, service orientated - if they were not they would soon be out of business.
The question is what can you offer that's different? So KBC, for example is making great play of it Northern and Central European connections, while the Icelandic-owned Kaupthing's point of difference is its regional and entrepreneurial connections and an advisory board made up of some heavyweight Midlands businessmen. David Adams of law firm Browne Jacobson says: "Creating a distinctive offering is important.
The following areas are the key battlegrounds: debt multiples; flexibility of pricing; due diligence - in particular for strong businesses, banks may accept less due diligence; venture capitalist (VC) terms - echoes of the prominence of VCs in the London market are now being seen in Midlands deals; and asset based lending, which is now firmly established as an alternative to more traditional cashflow funding." Andy Smith, business development manager at Co-operative Corporate Bank, says his point of difference has been the Co-op's high-profile ethical stance, which in particular resonates with a certain type of smaller business customer.
He adds: "It's vital to find a niche.
Business banking is still dominated by the big players - they have about 80 per cent of the corporate market. "But that can place us in a good position.
The big boys find it difficult to retain staff, be flexible and deliver what the customer needs.
The big banks seem to be driven by a need to cut costs - customers are becoming smarter and emigrating to banks of about our size." And, although it is possible to see the latest influx of business bankers as following a well-worn, decades old path that leads to the Midlands, those institutions prepared to stay in the market as times get harder can not only survive, but prosper.
Take Yorkshire Bank, which opened in Birmingham a decade ago with a complement of just three people.
It has now grown to 40 on the back of a rather old-fashioned, clubbable style of banking.
Yorkshire Bank's Birmingham managing partner, Debbie Golec, says: "We're not one of the big four or five - why should we pretend to be? We are owned by an Australian giant, which hopefully means we can offer the small local service, but have the big bank back up." Or take the aforementioned Fortis Bank.
According to Jon Howe, its regional director, Fortis opened in Birmingham ten years ago "with nothing" and has not only prospered in the city, but also set up in Nottingham and built up a team of 26 in front line relationships, including ten taken on in the last six months.
He adds: "I hear these words that newcomers will leave when going gets tough and I'm pleased to say that none of it fills me with fear.
We can demonstrate that in our case they're just words. "You thrive if you compete on credit appetite, price, service and relationship.
Provide them and you survive." We've heard what the banks want to offer us, but what do we think of them? As part of our banking feature, Insider contacted more than 100 customers - under conditions of strict anonymity - to discover what they thought of their banks.
Here are some of their thoughts. Mystery Client A In many ways we're happy with how the bank treats us, which is to pretty much leave us alone.
We have recently started to use online banking and our complaints are that the system is surprisingly badly written, is not intuitive and they doubled our charges - we're in negotiation about that! Our other complaint is that while we were a small company with turnover under £31m, we were looked after by a small business adviser who wanted to touch base every couple of years with the sole intention of selling life insurance or pensions.
We were not allowed to make transactions over £310k per day, which meant we had to stagger payroll over two days.
I really had to stamp my feet to be allowed to join corporate services. Mystery Client B Generally speaking we've a good relationship with the bank.
I think this has a great deal to do with the fact we're good customers and don't have issues with cash flow.
That said, problems have been with constant changes of corporate managers, attempts to increase charges when an agreement has been set and charging us for making internet payments on an updated system they insisted we use. Mystery Client C They've a very narrow focus and are only interested in the bottom line.
When businesses are experiencing financial difficulties, these may be short-term and relatively easy to address by looking at a number of factors.
The bank, while claiming to give business advice, only provides a cursory bottom line exercise, which can result in a perfectly viable businesses failing.
Banks claim to provide business advice through advisers, when they clearly don't have expertise, and advice given is geared towards the bottom line and cost cutting rather than looking at how to improve top line performance. Mystery Client D They're keen to offer value added services and keep you informed on new services.
They provide good networking links to other businesses within their portfolio and don't interfere when performance is in line with expectation.
However, administration is inconsistent, leading to errors and unnecessary additional work.
A good relationship manager can make a great deal of difference in both good times and when issues arise.
I'd like more local decision making: some opportunities require quick responses, but are referred to higher levels, leading to missed opportunities.