Ipswich Building Society's Chief Executive responds to the The Daily Mail article which put the future of Building Societies and Executive remuneration in the spotlight.

21 December 2009

Question 1. In your view, given current conditions and financial pressures, can our Society afford to remain independent?

The Society has done three things to ensure we can withstand the current conditions and financial pressures. Firstly, we have reduced our costs. This has involved making some difficult decisions but it is important that every penny we spend is adding real value to the business. Secondly, we have continued to grow. A Society of our size and capability can lend more money, and increase our savings balances. Therefore we have increased our branch network by opening two branches in two years, and have significantly increased the amount of mortgage lending and savings balances in recent years. Thirdly, we have not forgotten who we are, as a mutual building society we are here to help our members buy their own homes, and provide a safe and trusted place for their savings. This was our aim 160 years ago when the Society was first formed, and it remains our priority now.

The Society's Annual Report and Accounts will be issued shortly, and whilst the final figures are still be calculated I can confirm the Society has made a profit. This is in spite of our payment of the FSCS levy, the low interest rate environment and unfair competition from Government backed banks. We have had no exposure to Icelandic Banks, or been involved in commercial lending. Therefore the Society can afford to remain independent.

Question 2. Can our Society afford to remain independent and still offer competitive rates to both new members and existing ones?

I firmly believe we can remain independent and continue to offer competitive rates of interest to members both new and existing, and this is borne out by the fantastic increase in savings balances the Society has experienced this year. By listening to our members needs at the AGM, the feedback they provide in branches, and via our member panel, we fully understand what our members want and aim to deliver it. Having all market leading products in our product range is not realistic, and I know our members understand this. What is important is fairness in how we treat new and existing members, ensuring our accounts are available for a reasonable period of time and not just a window of a few days. We don’t lure members in with high interest rates only to reduce them at the earliest opportunity, and we encourage all members to save whatever they can, such as in regular savers and instant access ISA's.

Question 3. What steps are you taking to ensure that our Society weathers this horrible financial crisis?

The three actions outlined in the answer to question 1 explain some of the steps we have taken, but we have been taking direct action by making a lot of noise in the media and the Government. When the FSCS levies were announced the inequity in how these payments are calculated was evident, and I wrote to all of our local MP's asking them to raise this issue on our behalf. I have also recently met with Chris Mole, Labour MP for Ipswich and deputy transport minister. We discussed the lack of support for Shared Ownership (an initiative to aid first time buyers get on the property ladder) in the pre-budget report and in the FSA's regulatory plans. I have also been vocal in the local and national media about the importance of the Building Society sector, and supported The Building Societies Association’s stance on levelling the playing field between the Government backed banks and Building Society sector.

Question 4. Given the wider economic climate, in which many of our members are suffering financially, if your salary structure allows you take a bonus, will you be taking one this year?

According to the Society's salary structure, I am entitled to a bonus and will not be taking one. I also did not take a bonus last year. The Society is a part of the community in which it operates - our members are our neighbours, they live in the same towns as our staff, their children will go to the same schools. It is impossible to separate the two and as such I understand the concerns of our members and the local community. It would be incorrect for me to take a bonus at this time and I am happy to forfeit this.

I hope this has clarified the Society's stance but if you have further questions please contact me by e-mailing ceo@ibs.co.uk As those of you that attended our AGM will know, I want our members to know they can raise any question with me or the board and it will be answered honestly and clearly.

Paul Winter
Chief Executive

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