Sir Brian Pearse, Midland Bank's chief executive, issued his challenge as the bank announced a big recovery in 1993 for pre-tax profits, which increased by pounds 640m to pounds 844m, on the back of healthy dealing profits and falling domestic bad debt provisions.
Sir Brian, who is due to retire at the end of March, said that Midland was ending its own branch closure programme, which began before that of any of the other big banks in the 1980s. Having cut its branch network from a peak of 2,600 in the 1980s to 1,700 today, Sir Brian said the UK bank was about the right size.
When asked whether he planned to close any more branches, he said: 'No, not ours, we want to close the others instead.'
He said there were far too many bank and building society branches in the high street.
'We hope to see mergers amongst our competitors, which should see a reduction in branches.'
Midland is trying to reverse the centralising drive that started in the 1980s, and wants instead to return decision-making to branches and regional centres. Five senior managers had been sent out from London head office to spearhead this effort, Sir Brian said, joining 208 area managers.
Whether Midland would be able to afford this heavier cost base in the long run remained to be seen. There certainly needed to be a further shakeout, he said. Some of the high streets looked pretty sickly.
'Telephone banking may be more attractive in the long run than new premises,' he added.
Firstdirect now has half a million accounts, representing 365,000 customers, and is adding 10,000 accounts a month. It made a small loss last year but made a profit in December 1993. Sir Brian said he expected it to make a profit again this year.
Cross-selling to Firstdirect customers had not yet got into full swing, he said. The telephone service would be trying to sell more mortgages and financial services, where the margins are better than for most retail lending.
A fall of pounds 118m in provisions against bad debts for UK commercial banking, to pounds 447m, was countered by a big rise in provisions against overseas commercial lending, up from pounds 16m to pounds 104m.
This was mainly the result of big losses in the Parisian property crash and lesser losses on loans to German manufacturers.
Lesser developed country provisions also rose because of the structure of the Argentinian debt release deal so that, overall, Midland provisions rose from pounds 507m to pounds 670m.
UK loan demand continued to be weak except for mortgages, Sir Brian said, and there was a possibility it would remain flat for some years to come.
He stressed the importance of mortgages, which have far healthier margins than most retail lending business.
Midland was already the 16th largest mortgage lender in the UK and aimed to be tenth, he said.
There had been increases in Midland's market share of lending to small businesses. The bank had also picked up a number of large corporate customers, because of its more global scope following the takeover by HSBC.
He was also proud to announce a 40 per cent fall in complaints.
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