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Departing Nationwide boss Joe Garner takes swipe at big banks

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Strategy: Joe Garner says Nationwide still owns lots of its branches

Not many chief executives would openly say they’re proud to be one in all the UK’s biggest taxpayers. Most are intent on minimising the quantity they hand over to the Revenue to maintain their shareholders blissful.

It’s different for Joe Garner, chief executive of Nationwide Constructing Society. As the pinnacle of a mutual – owned by its members and run purely for his or her profit – he sees paying lots of of hundreds of thousands of kilos in tax as a badge of honour, particularly at a time when the Chancellor must replenish the coffers after paying out billions of kilos to assist the country through the pandemic and now the cost-of-living crisis. The constructing society got here tenth out of 40 lenders for total tax contributions for the financial 12 months to April 2021. 

‘I believe it could be a surprise to many individuals to listen to Nationwide is a top-ten taxpayer within the UK, but in my view it’s a great thing,’ he says. ‘We pay our taxes with pride since it’s one other way we contribute to the communities we serve. 

‘I’m rather more proud to say we’re a top taxpayer than I can be if we were one in all those organisations that had found cunning ways, through subsidiaries distant, to avoid paying or to minimise their tax exposure,’ he adds, in a dig at the large banks, a few of which have made prolific use of offshore havens for themselves and their customers. 

Nationwide paid greater than £650million within the 12 months ended April 2022, including corporation tax, the banking surcharge, bank levy, employer’s National Insurance Contributions, irrecoverable VAT and business rates. He doesn’t quibble at paying an 8 per cent tax surcharge, levied on all of the lenders in retribution for the credit crisis, although Nationwide was not especially culpable compared with the likes of RBS or Lloyds, each of which took huge taxpayer bailouts. 

Garner, 52, is speaking on the eve of his departure from Britain’s biggest constructing society after six years on the helm. 

He has been a staunch champion of mutuality, at a time when the concept has been under threat. 

There has never been the faintest suggestion that Garner would try and sell out the society to line his own pockets just like the bosses of LV, Britain’s second-largest mutual insurer, who tried to flog the firm to non-public equity. 

His successor, Debbie Crosbie, shall be the mutual’s first female chief executive when she starts her latest job later this week. 

He’s leaving on a high note, having doubled Nationwide’s profits to £1.6billion last 12 months.

Soberingly, nonetheless, many shoppers – he prefers to call them members – are in for a tricky time as a result of the cost-of-living crisis. 

Garner expects house price growth, which remained strong throughout the pandemic, to slow within the months ahead. But he argues that Nationwide’s mutual status means it’s well placed to assist savers and borrowers weather the storm ahead, not least because, unlike his mainstream bank rivals, he will not be intent on a wholesale programme of branch closures. The society has 625 outlets, making it the UK’s third-largest network. 

‘Every so often, yes, we do close a branch,’ he says, ‘But we have shut 5 per cent of branches in an industry that has shut around 30 per cent. The important thing difference is that lots of our competitors try to search out ways to shut branches, while we try to search out ways of keeping them open.’ 

Post-pandemic, Nationwide has brought in flexible working, and branches could also be closed one or two days every week. But, he says, staff are still helping people on the phone and thru digital channels. 

‘I hearken to some competitors saying transactions in branches have fallen, but have a look at the character of those transactions. Why do people come right into a branch?’ he asks. ‘Often it’s because they’re coping with difficult, sensitive issues, where face-to-face contact is more necessary, similar to bereavement, power of attorney or financial difficulty.’

So have the banks which can be shrinking their networks – including TSB, run until recently by Crosbie – been getting it incorrect? ‘Debbie hasn’t began yet, but I do have a way there’s a deeply held belief in our society and our leadership in being there on the high street for members and communities,’ he says. 

‘Our branches are typically smaller than banks. We didn’t get carried away, as lots of our competitors did, on the sale and leaseback drug a number of years ago, so we still own a high proportion, which implies our rent bill is lower. ‘And typically we should not in super-prime locations, so the economics are different for us.’ Some competitors, he says, ‘see branches as a price, but we see them a spot of real value’. Garner has are available for criticism over the dimensions of his pay packet, though in fairness, in April 2020, he was the primary boss of a significant lender to volunteer for a giant cut to indicate solidarity with staff and customers within the pandemic. 

Last 12 months, he took home about £1.2million, compared with just below £2.4million in 2019 before Covid – large sums, but loads lower than the large bank bosses. 

Garner could be very apprehensive about inflation, which he says is ‘frankly bad for everybody’. 

‘It erodes the worth of savings and hits affordability,’ he says, adding on a more optimistic note: ‘But is not it a great thing that there’s a financially secure mutual with a singular purpose? 

‘If the pressure intensifies, we should not going to feel the dilemma of whether we’re serving shareholders or customers. We’ve just one job to do, which is to face by members.

‘I’m concerned about inflation, I actually am, each at a financial level and, let’s face it, the geopolitical environment. Who would have thought we can be seeing a war in Europe? At the identical time, all wars end in a deal, eventually. None of us know the way long it should be, but it should occur, and infrequently the darkest hour is before the dawn.’ 

Nationwide has raised greater than £1million for the British Red Cross Ukraine Crisis Appeal from members and staff, including a donation of £250,000 from the lender itself, as a part of its charity programme. 

It has also given £4million prior to now 12 months to local housing charities and projects. 

Endurance: Joe Garner's hobby is triathlon, where her represents Great Britain in his age group

Endurance: Joe Garner’s hobby is triathlon, where her represents Great Britain in his age group

As for mutual advantages, members are offered a variety of advantageous rates on products, and are entered in a monthly £1million prize draw. Over the past 12 months, the financial profit passed back to them increased by 23 per cent to £325million, though Garner says he would really like to have returned much more to members. 

The most recent results, he says, don’t, reflect the cost-of-living crisis. 

‘Up to now we have not seen a rise in arrears. What we’ve seen is, where people were already struggling, they’re finding it even tougher,’ he adds. 

Garner – who previously held senior roles at HSBC, Dixons, Procter & Gamble and BT Openreach – has not formally selected his next move, but he has been approached by Downing Street to guide an inquiry into surging bank fraud. 

But his biggest achievement, he says, is that under his command, Nationwide ‘stayed true to our values’, adding: ‘As chief executive, I actually have only been the temporary custodian of this mutual’s integrity.’ 

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