Outlook: Why Abbey's Mr Birch takes a lot of beating

ASK ANYONE in the City who their favourite banker is, and the answer would be almost unanimous; Sir Brian Pitman, chairman of Lloyds TSB. Over the years, Sir Brian has left everybody else trailing, consistently delivered a rip roaring return. Almost everyone, that is. There is, however, someone who has done even better in terms of shareholder value, and that's Peter Birch, chief executive of Abbey National. He retires this weekend after 14 years in the hot seat and he does so on a high note, with pre- tax profits up another 16 per cent and the dividend up nearly a fifth.

Abbey was the first building society to convert to a plc and float on the stock market. At the time, virtually all the others including the mighty Halifax, poo-pooed Abbey's trail blazing experiment, arguing that long term the customer would be squeezed by the demands of shareholders. But one by one they've followed suit. Only the Nationwide and a few also rans now cling to the mutual tradition.

You can argue until the cows come home about which structure of ownership is best for the customer. As you might expect, Mr Birch makes a compelling case for the joint stock company. But one thing is certain; the Abbey conversion has been outstandingly good for those customers who hung onto their share allocation. In the eight years from conversion to the end of last year, shareholders recorded a total return of 1157 per cent taking account of the movement of the share price and gross dividends over that time. That makes it the best performing share in the FTSE 100.

This is not all down to Mr Birch, of course. In large measure it is due to the fact that when Abbey floated, the stock market had no proper appreciation of how much a building society might be worth. It is also down to the market's general love affair with the banking sector. But Mr Birch has played his part with good management and well chosen acquisitions. His successor, Ian Harley, says he wants to emulate Mr Birch's achievements. We all wish him well, but it's hard to see how he can.

Indeed, it is Mr Harley's unfortunate lot that however hard he works and however successful he is in his management, his reign is much more likely to see a period of share price underperformance than a continuation of the heady gains of the Birch years. Without another round of far reaching consolidation, which ministers and regulators are hostile towards, the boom in bank shares cannot be expected to continue. Mr Birch is going to be an impossible act for Mr Harley to follow. The same will be true for whoever steps into Sir Brian Pitman's shoes too.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • 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

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk