New Nationwide chief keeps bank option open

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The Independent Online
NATIONWIDE Building Society, Britain's second-largest, might look again at converting to a bank if there is pressure from members to do so.

But Brian Davis, promoted yesterday from operations director to chief executive, said the society had no plans to become a bank - and 'neither do we have anyone knocking on our door trying to buy us'.

Mr Davis takes over from Tim Melville-Ross who is leaving to become director-general of the Institute of Directors in August as a successor to Peter Morgan. Mr Davis is the only genuine rocket scientist in the financial services industry.

The term is used ironically to describe whiz-kids who invent new derivatives products for investment banks but Mr Davis, aged 49, has a doctorate in solid rocket fuel engineering from Sheffield. He went to Nationwide in 1987 after 16 years in technology and marketing at Esso.

Mr Davis said Nationwide had no reason to convert to a bank unless members wished to do so. One way to test that was to look at the response to other societies' plans, including the Lloyds bid for Cheltenham & Gloucester.

He added: 'If they react very favourably to C&G and one is beginning to pick up information that it might be more attractive than we otherwise thought, we should investigate further.'

Mr Davis backtracked on a weekend interview in which Mr Melville-Ross said a stock market flotation was on the agenda.

He said Mr Melville-Ross had been 'reviewing the issues', not putting forward a plan. 'We have no plans and we certainly don't have any time-frame'. City analysts believe Nationwide is worth pounds 4bn - as much as HSBC paid for Midland Bank.

Mr Davis added that building society regulations were not restricting Nationwide, though he hoped for changes in a government review. Without them, there would be more pressure to convert.

'Building societies have a fairly unique role in our society. That is not something you would wish to lightly put aside,' he said.

John Wriglesworth, building society specialist at UBS, said the society would be in a safe pair of hands with Mr Davis.

He did not believe Mr Melville- Ross had been pushed out after 10 years in the job, because there was to be no compensation for loss of office and because profits would be up when the results were announced next month. 'This is not a sinking ship,' he said.

Mr Melville-Ross was in charge of the painful merger of Nationwide with Anglia in 1987 and has taken the stick for the society's poor performance in recent years.

Mr Davis admitted: 'We were a bit of a sleeping giant but that's now pretty much behind us. Our efficiency was not as good as some of our competitors', but every year we have consistently improved and I expect that to continue.'

Nationwide also appointed Bernard Simpson to the board as executive director in charge of services. He joined in 1989 from Gateway Foodmarkets.

Mr Melville-Ross's talents as a lobbyist and ambassador for the building society industry have given him a higher profile in Whitehall than most society executives, and are likely to have been a key qualification for the IoD job.

He will be on a three-year contract with a fixed salary. Mr Melville-Ross was chairman last year of the Council of Mortgage Lenders.

(Photograph omitted)