Christian lenders attack culture of greed at mainstream banks

The bosses of Britain's Christian lenders have attacked the sales-obsessed culture and declining ethics of the mainstream banking industry.

Trevor Smith, the chief executive of the Salvation Army's Reliance Bank, accused high-street banks of abandoning principles to chase profits and sell dubious products. The bank, based in the City, was founded in 1890. Mr Smith, who spent his career at Barclays before joining the Salvation Army in 1998, said: "When I joined the Institute of Bankers, the profession was about probity, integrity and 'my word is my bond' and over the last 30 or 40 years that has been corrupted by competition... The moral balance just seemed to go and this greed culture came in."

Chris Sheldon, who runs Kingdom Bank, said he left his job at NatWest in 2002 because he wanted to do something more valuable with his skills.

Both banks operate traditional models of collecting deposits and making loans and have gained business during the crisis. Reliance's main purpose is to manage the finances of the Salvation Army's operations but it has expanded into personal and small-business banking in the past 20 years.

Mr Smith said: "A number of people who have lost faith in the banks on the high street have come to us." He added that this was partly because the bank pays at least 75 per cent of its profits to the Salvation Army. Both banks said they had never had a complaint made against them to the Financial Ombudsman.

Kingdom, founded in 1954 in Nottingham and also owned by a Christian charity, has roughly doubled in size since it became a trading subsidiary nearly seven years ago. Unlike Reliance it does not offer current accounts but it collects savings to lend to churches and Christian organisations working in the community. It donates 10 per cent of its profits to its parent charity and 10 per cent to other Christian causes.

Mr Sheldon, interim chief executive at Kingdom, said new customers liked to know their money was funding good causes. He added: "They also felt we weren't doing anything complicated. We wouldn't know a derivative if it bit us on the backside."

Still, the crisis has caused problems in the form of bad debts and margins shrunk by low interest rates. Reliance's pre-tax profit last year dropped to £152,120 from £647,105 in 2010, driven by a £237,000 charge for a bad debt and legal charges. Its donation to the Salvation Army fell to £116,460 from £503,750 the year before.

A £200,000 charge for a bad debt and suspended interest sent Kingdom to a £145,000 post-tax loss last year after reduced net interest income helped to cause a £92,000 loss the year before.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...