Abbey promises to stick to what it knows best
Monday 24 October 1994
It has also set itself a benchmark for judging whether it gives value to shareholders, by promising over the long term to beat the total return, including dividends, of the FT Actuaries all- share index and a specially chosen index of financial services competitors.
An unusually detailed corporate mission statement that has taken two years to prepare defines the bank's principal business as the 'manufacture and distribution of personal financial services in the UK'.
Against a background of embarrassing losses from a foray into estate agency in the late 1980s, the statement assures management and staff that Abbey plans to stick to its last and not suddenly leap out in other directions.
It says: 'We will broaden the base of our company by developing related businesses in the UK and Europe only where we can obtain the expertise and resources to attract good quality financial customers, and achieve significant and sustainable competitive advantage.' Briefing documents given to staff with the unpublished statement say: 'Don't worry - we are not going to be rushed into areas we know nothing about. Our purpose is to create shareholder value, not destroy it.'
The statement is also cautious about expansion in Europe, where the bank's early investments in France ran into problems. It says only that 'in the long run' selected Continental European countries will contribute to the bank's success. But the statement does underline the importance of the bank's successful treasury department to future performance.
Abbey's main markets, the statement says, are secured and unsecured lending, short- and long-term savings, insurance protection and personal banking.
The document says: 'Our underlying purpose is to achieve above- average growth in shareholder value over the long term. This can only be accomplished if we meet the needs of our customers, our staff and all of the other stakeholders in our business.'
The bank says it intends to generate above-average growth in the present value of future cash flow. As well as the FT Actuaries benchmark, it will measure its performance against building societies and clearing banks, probably picking 10 companies for comparison.
Abbey has easily beaten the all- share index since its flotation in 1989, with its share price trebling.
Abbey's previous mission statement was one sentence long, defining the bank's business as meeting personal financial needs. But John Fry, a director, said it was a factor in the bank's decision not to go into commercial lending in 1990, a period that produced heavy losses for some banks.
The new statement spells out objectives in detail because it is to be used as a management tool at group and subsidiary level, Mr Fry said.
- 1 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 2 Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
- 3 Sussex couple die in suspected Christmas Day 'suicide pact'
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
UK weather: Travel chaos continues as King's Cross train delays add to snow on roads
The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
North Korea calls Barack Obama 'a monkey' in latest attack as 'The Interview' row festers
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...