The speaker was a recent new member Ian Kennedy, who lives in Pittenweem and provided the club with an insight into his career with Building Societies.
Ian was born and brought up in Lanarkshire and attended Hamilton Academy, thereafter joining in 1968 the Alliance and Leicester at that time the 6th biggest of over 150. It is interesting to look back at these organisations now in the light of what has transpired in recent years.
Halifax the biggest and highly respected was demutualised and merged with Bank of Scotland, a pillar of the Scottish financial world. It is now part of Lloyds TSB and the Halifax name is disappearing from Scotland.
Abbey National – demutualised – now Santander – the name has disappeared.
Nationwide – now the largest Building Society – is committed to remaining mutual.
Leeds Permanent – merged with Halifax – disappeared from the high street.
Woolwich – taken over by Barclay’s Bank – disappeared from the high street.
Alliance - merged with Leicester Permanent, demutualised and now Santander - disappeared from the high street.
Bradford and Bingley – demutualised – big losses – now part of Santander.
Northern Rock – demutualised – first bank in 150 years to suffer a run on its funds - now nationalised.
Ian gave a brief historical perspective on the background to these and many other Societies which were established in the late 1700's by ordinary people fed up with standards of housing.
Small groups met once a month to pay into a savings fund. When enough was saved they bought building materials and physically built a house and drew lots to see who would have that house - and so on until everyone had a house and the Society was then wound up . This idea caught on and more demand following the Industrial Revolution as more people moved from the land to towns and cities. During the 1820’s Societies acquired a reputation for financial prudence and in 1840s began to accept deposits and lend money, rather than physically building themselves. Rather than wind up they became Permanent societies and Mutual organisations with no shareholders.
By 1910 there were 1,700 societies which reduced to 150 through amalgamations. As competition increased Societies wanted more freedom to offer more products and to be able to raise more capital and were gradually given more powers with links to insurance companies, new financial products, and even buying chains of estate agents. Some societies paid tens of million, only to sell them back a few years later for as little as £1!
However, this freedom was still not enough so Societies began to demutualise and issued shares. This freedom led to problems as societies became banks and started to get involved in buy-to-let mortgages, commercial lending, and other areas where they had no expertise. House prices were rocketing, so banks were falling over themselves to lend on mortgages. In the 1990s banks were lending 5 and 6 times salary. People were buying houses off plan and selling them on immediately for tens of thousands of profit. Northern Rock offered 125% mortgages! If you don’t pay, we will kick you out and sell the house and get our money back! Of course, it all had to end, and end it did spectacularly with the failure of American banks, the near bankruptcy of RBS, HBOS, Northern Rock and of course the collapse in house prices.
Ian was the manager of the Alliance branch in Byres Road Glasgow from 1972 until 1981, when he moved into the city centre and later to 3 branches on the South side, thereafter moving to Stirling and Falkirk.
By this time most banks and building societies had been re-organising, downsizing, closing branches, and the Alliance & Leicester, as it was by then, was no exception. He recalled having a number of colleagues who got the telephone call, usually at home on Sunday night, to be told “we have considered the future, and it doesn’t include you.”
A major re-organisation of the branches was announced in 1996, and at that point he was in the happy position of being able to negotiate an early retirement package and at the ripe old age of 53 pedalled off into the sunset. Or so he thought as he started work in his local high school and that lasted until a few months short of his 65th birthday. That has generated its own fund of stories and happy memories - for another day.
