Tuesday, 24 July 2012

Banking: A New Era? Update on Bank on Dave, Metro Bank. Boring Bank of Cambridge. Cambridge and Counties Bank

Bank on Dave.

After the never-ending dismal news of banks and bankers, new banks have emerged.

David Fishwick, 41, came to national attention this July after Channel 4 TV showed “Bank of Dave”. A self-made millionaire from selling vans and mini-buses, Dave opened a bank in his home town of Burnley in Lancashire last year and now another programme about him is in the pipeline. So far, Dave does not have a banker's licence from the FSA, but with financial advice is managing without one for the moment.  Banking licences are hard to obtain, and to qualify the bank needs a huge sum as security and back-up. For the moment Dave is backing investor defaults with his own money.

The bank is still doing a roaring trade and would-be savers have to go on a long waiting list. The bank pays out 5% interest on deposits, and gives loans to local business people turned away by other banks. Bank on Dave is extraordinary in that all its profits go to local charities bar the running costs. The Burnley Express quoted ebullient philanthropist David Fishwick’s reaction to the success of his bank: “We have seen ‘To Let’ signs everywhere. But now we are filling shops, helping new businesses and we are helping a lot of people get a decent rate of savings”.

Couldn’t Dave use the some of the profits to save up for a banker’s licence, as well as giving some to local charities?

Metro Bank was founded in the U.K in July 2010, with 4 branches - called stores, in London and now has twelve, with 200 or more planned by 2020. Annual results for 2011 showed a loss of £33.1m, accounted for by start-up costs of £24 million and £12.6.million on salaries. Last month the bank raised £126m and joined a government-backed scheme to lend SMEs (Small and Medium Enterprises) up to £100 million. Almost a year ago the bank had 80,000 current account customers and is expected to have many more by the end of this year. Appointments are not needed, and the stores are open for 361 days of the year, for much longer hours than normal banks. Marks & Spencer’s new banks also have longer hours, which tally with the shop’s opening hours.

Apart from normal banking services, the stores are kitted out with extras such as customer lavatories. Metro Bank also provides titbits for dogs and refunds the purchase fee for dogs and cats that are rehomed from Battersea Dogs' and Cats' Home.

Cambridge Commercial Lending Company Limited also known as Boring Bank of Cambridge, or the Cambridge Boring Bank, was dissolved on 4 November 2012 earlier this month.

Way back in February 2010 papers were full of this Boring Bank-to-be which was supposed to be opening  once it had raised £50m in funding and a banking license from the FSA.

The bank had worthy aims: it was boring because it was going to be utterly trustworthy and keep things simple with deposits and loans. It was set to lease premises from Trinity Hall College with six staff. Banker and entrepreneur Nigel Brown appointed big gun and former head of Coutts, Peregrine Banbury, to be the CEO; among other directors were David Gill, ex HSBC and now MD of St John’s Innovation Centre in Cambridge and Paul ffolkes Davis, the Bursar of Trinity Hall, (a former banker with NM Rothschild & Sons Ltd, NatWest Markets and Rabobank International). 

 Cambridge and Counties Bank

CEO Nick Clarke, Director Gary Wilkinson
and Chairman Paul ffolkes Davis
Cambridge did get a new bank in the end: it wasn’t Boring Bank of Cambridge but Cambridge and Counties Bank instead. This was formed on 11 June 2012, and is jointly owned by the Cambridgeshire Local Government Pension Fund and Trinity Hall. The bank aims to provide ‘straightforward, no-nonsense products that will help small to medium sized businesses reach their full potential.’

The Board of Directors from Cambridge and Counties Bank website includes Paul ffolkes Davis, the aforementioned Bursar of Trinity Hall and Chairman of this new bank.

What is surprising is that the other directors from the erstwhile Cambridge Commercial Lending Company Limited aka Boring Bank of Cambridge, in particular Nigel Brown, who had the original idea for a bank in Cambridge, are out of the loop.