An Inspector Calls at Nationwide’s annual general meeting (City AM)
By Samuel Norman, Senior City Reporter
Link: https://www.cityam.com/an-inspector-calls-at-nationwides-annual-general-meeting/
In 49 days An Inspector Calls at the Nationwide annual general meeting and in this week’s column Samuel Norman looks at what he could be asking. Also on the agenda… after annual report season, it’s time for Starling to go full throttle on Engine.
Not since the keen-eyed Inspector Goole shattered the comfortable illusions of the Edwardian elite has an uninvited guest threatened to sour a private feast’s mood so sharply.
James Sherwin-Smith, the man attempting to clinch a seat at that exclusive dinner party otherwise known as Nationwide’s board could be just weeks away from doing something no member has managed in 25 years.
And much like the central figure of JB Priestley’s An Inspector Calls, if Sherwin-Smith makes his way into the room, he does so with every host’s worst nightmare, bearing a list of thorny questions that nobody wants to cough up the answers to.
Amongst these ranks his top issue: transparency. Speaking on City AM’s Business as Usual podcast, he told me the huge Virgin Money takeover and the de-banking of Michael Armstrong, a key critic of the deal, served as a catalyst for his boardroom bid.
“If this was a PLC, I think the equity analysts would be pouring over the details of this… I can’t think of another retail bank integration of this scale in recent times that has been less scrutinised,” he says.
“If this was a PLC, I think the equity analysts would be pouring over the details of this… I can’t think of another retail bank integration of this scale in recent times that has been less scrutinised,”
James Sherwin-Smith
The whopping £2.9bn deal shocked the City when it was first unveiled and stoked even more controversy as Nationwide members were not permitted a vote on it, raising questions around transparency.
“If your customers are also your owners, you don’t have to act in a way to help shareholders profit, and as a result, you look after your customers. Customers come first as an inherent part of your model,” Sherwin-Smith says.
Instead, a breakdown of communication has emerged, he suggests, amplified by Nationwide being the only building society in the country that doesn’t allow members to physically turn up to its AGM.
He describes this as a major block for members to convene and find common ground… or “community and all that nonsense” as Mr Birling, the fat cat factory owner, sneers in Priestly’s play.
His mission has sparked lively chatter around the ethics of building societies and just how democratic they should be. Labour MP Navendu Mishra has even sent a letter to the mutual’s chair Kevin Parry, detailing the unease over how executives have been communicating with members.
Mishra penned a similar letter to Rachel Reeves, a slightly awkward moment for the Chancellor who named Nationwide chief Debbie Crosbie her Women in Finance Champion last December.
Crosbie herself has been a central focus of the building society’s criticism, as has her £7m pay packet. Readers of this column will know there is no hesitation in putting praise on the Scottish banker. She steered the building society towards being named ‘Britain’s Best Bank’ in an illustrious ranking earlier this year and the positive sentiment is one Sherwin-Smith is able to quietly echo.
Though he does take some gripe with the philosophy of, as he puts it: “pay us like bankers but don’t hold us accountable like bankers.”
Unsurprisingly, Crosbie’s hesitation to endorse Sherwin-Smith’s candidacy has raised questions. Following the firm’s annual report last week, she said the matter was one for the board, on which she sits.
At the AGM, members are given a ‘Quick Vote’ option for all board-recommended candidates – essentially serving as a digital rubber stamp for management. This raises two key questions for Sherwin-Smith: whether the board will endorse his candidacy and whether they will suspend the option to ensure a fair election. Seven weeks out, I understand he is yet to have confirmation on either.
And whilst, like Goole, Sherwin-Smith is, in fact, no detective, his goals equate to an almost identical service, in pulling back the curtain. Nationwide’s directors may have hoped to spend the summer toasting the final integration of its Virgin Money deal but an uninvited guest is already at the door, questions in hand, and keen to remind the board that the 16m members outside are the ones that actually own the house.